Your formula in your initial post is correct, albeit with a small error in maths 😉 . The formula for calculating the current limit on a Pololu DRV8825 driver is “Current limit= VRef x 2”.
For the 1.7A stepper that is 0.85V for Vref.
If you connect 2 motors in parallel then each will only receive half of the current, so at that 0.85V you’re only going to get 1.7A/2=0.85A per phase at each motor.
To double the current you would then need to increase the VRef but you won’t be able to output 3.4A anyway as the maximum spec output current for the DRV8825 is 2.5A and in reality the Pololu will only give 2.2A due to the 0.1 ohm current sense resistors.
Bear in mind that if you do decide to use the full 2.2A with the 2 steppers in parallel (that’s 1.1A to each motor), then you will most definitely need a heatsink and active cooling for the IC.
Most people seem to automatically go for parallel when connecting 2 stepper motors to one driver but in this situation I’d be more inclined to wire them in series.
This will allow you run them at their rated current if you wish as both motors will receive the full current of the driver instead of the reduced amount in parallel.
At 0.85V VRef, both motors will receive 1.7A per phase if you wire them in series.
There are pros and cons to wiring stepper motors in series vs parallel. In series there is slightly less torque at high speeds but in this situation you wouldn’t have been running them at full current in parallel anyway so it should be win-win. Also if you’re using the machine for milling/cutting then torque at high speed isn’t what you’re looking for anyway as the feed rates tend to be relatively slow.