Yes, the 9Ah FlexVolt batteries definitely are using 20700. You can see the 9.0Ah batteries are larger to accommodate the 20700 cells.
@cr8ondt has got it right, at least up to his speculation, but it’s inline with what I heard.The speculation from the NPS16 attendees is that Milwaukee was late bringing out the 9.0Ah battery because the 3ah 16850s are right on the edge of viability and they were having heat issues, but Milwaukee never verified that.
I’ll also add that not only do the 20700 batteries have more capacity, They also have more volume to handle the heat. At Metabo they were telling us that the 20700 package only gave them about 20% more capacity, but they got 2x the runtime. That might be partially because of the tweaked LiHD chemistry, but don’t underestimate how much heat kills runtime.
Some other interesting battery info from Metabo. Cells are rated at 1A discharge rate. Start pulling 10,20,30A from the cells and they heat up lowering the overall Ahs. The middle cells heat up the most because they have nowhere to dump their heat.