Running (in GP's case) or exercising in general has the added benefit of building (up to a point) more muscle. More muscle mass means higher basal metabolic rate. Higher BMR means you burn more calories all the time.

So yes, a 500 kcal deficit every day (without adding exercise) is comparable in the short term to the runner burning 700 kcal extra 5 days a week (but not adjusting their diet). But, especially if that muscle mass is sustained, the runner or person engaging in regular exercise is going to be better off in the long term with respect to keeping the weight off.