Hmm..
Both had a great year in 1997.
Both switched from babyface to heel.
Both created great heel factions.
Both also missed time due to injuries.
Bret won the WWF title twice in 1997 (Feb. and Aug.)
Shawn won the WWF title twice in 1997 as well (Jan. and Nov.)
Shawn also won the Tag Titles (May) and European Title (Sept.) in 1997.
So now let's look at their best matches from that year. (not counting Montreal)
Bret: Final Four Match
Austin-WM13
Austin -IYH April
Austin-Street Fight Raw
10-Man Tag-IYH July
Taker-Summerslam
Shawn: Sid-Rumble
Tag Title w/Austin vs. Owen/Davey
Austin-KOTR
Mankind-Raw Aug
Taker-Ground Zero
Bulldog-One Night Only
Taker-HIAC Badd Blood
Pretty even there, both had some of the best matches of their careers in 1997.
So we go to promos, where although Bret improved and was able to cut some good heel promos I still think Shawn's promo game in '97 was just on a whole 'nother level. Promos were never Bret's strong suit, so I would give it to Shawn, even though I feel '97 was probably Bret's best promo work of his career it just wasn't as good as Shawn's.
This is really close overall but I would say Shawn had the better year...slightly. Better Matches (IMO) Better promos, was a better heel, and I feel that DX was more impactful than the Hart Foundation was. Bret was hot for a couple of months after he turned heel but by mid August he was already losing heat as champion and was in a nothing mid card feud with the Patriot while Shawn was red hot as a heel and in the main event feuding with the Undertaker.