The C7 will support Smartnet features such as priority talkgroup scan, ID display, encryption, emergency signaling, remote control stuff, dynamic regrouping, etc. Basically the stuff you need to be APCO 16 compliant.
The Privacy Plus radios are not intended for public safety use, and thus don't have those public safety features that the Smartnet radios do.
FYI, you can have multiple sites with a Privacy Plus system if you use simulcast. I used to run a large PP system for a large petroleum company that covered all of west Texas and eastern New Mexico. We could talk from end to end just fine.
For scanning purposes, a PP radio will work just dandy on a Smartnet system. About the only thing you'll lose is priority scan and ID display (rarely used anyway in scanning).
Jeff