Pretty much every change and new move/ability in gen 7 is being added to the game. This does mean that Drizzle Pelipper and Drought Torkoal will be axed, and Gen 7 Pokemon now have to be added everywhere.
For the instance where HMs become TMs and replaced other TMs, the old TMs will remain and will be teachable to Gen 7 Pokemon that learn the move through breeding/levelling up. e.g. Shelly will still give out struggle bug and wimpod/golisopod will be able to learn it.
Alolan formes are definitely being added.
Custom shinies are not being worked on yet, but normal shinies will be added, and I'm not sure if they'll be in e17 or e18.