In the nethunter-installer directory look at the readme file for build instructions. Nethunter already has a kernel built for the nexus 7, so no need to build a new one. Follow the directions for the build.py for your device and add the --rootfs full to the end. This will add the chroot to the build.
That is the difference for the file size, the chroot will add the 600 mb+ to your build.