The CH-7's blades were better, they didn't bow like a banana. The
Mini500's blades were bowing forward as you go from the root to tip.
This changed the pivot point for the baldes, imagine taking a straight
bladed sword and rotating it, the tip and the rest of the sword pivots
at the pivot point. Now imagine taking a curved sword and rotating it
the same way, you'll notice that the tip stays at the pivot point as
well as the root, but the remainder of the sword will rise or fall due
to the curve.

The CH-7's blades were fabricated better, they were more uniform or
should I say more consistent than what Fetters was able to produce.
Being more uniform, and of the shape that they were designed, they were
easier to track and balance. This resulted in a smoother flying ship.
Fetters couldn't get the blades to come out as designed. They were not
consistent, they bowed where they shouldn't have and this resulted in
problems when trying to track and balance the blades. I remember that
Gill had a hard time getting the baldes to fly smoothly.

I think this fact alone (bad blades) resulted in inefficient rotor
system, Unlike propellers, the blades of a helicopter changes pitch
continously, with bad blades, this resulted in "shaking" or unsmooth
helicopter. The shaking caused the frames to crack! Again, instead
of addressing the problem (bad blades), Fetters added more metal to the
frame in an attempt to beef up the area prone to cracking.

Since the blades were not as efficient as the CH-7's blades, the engine
had to work much harder to get the same lift. That's where Fetters
came up with the bandaid fix, the PEP kit. Instead of tackling the
blade problem, he overworked the engine by PEPing it up. CH-7s didn't
need to be PEPed up.

That's my two cents worth.