To say "The game's rules and setting are loosely based on the HERO System ruleset." is like saying "Chess is loosely based on Checkers".
The two rules systems are so far apart that the only link between the two is that they both involve superheroes.
"settings" is an odd term as there were no cities in the original Champions.
What was used in Champions Online that came from the Champions RPG was the signature characters. That is pretty much the only thing in the Champions Online that is true to the Champions RPG.
It's a cover-up. It's their Marvel Universe game that fell through with the Champions name stamped on it to try to give it CRED with the gaming community - only to make matters worse, they retconned the Champions RPG rules (the original Champions rules are the most balanced RPG rules that I have ever had the pleasure of using) to fit their MMORPG's rule set.
Their excuse was that players weren't intelligent enough to design characters that could survive in-game if they were given the freedom of what the original Champions RPG had to offer. Maybe that is true for the average gamer that didn't want to put effort into it, but they could have made baseline characters while allowing advanced players to explore the more in-depth options of the Champions RPG (which was incredibly in-depth if you wanted it to be).
If they had called it something else and hadn't defaced Champions the RPG, I probably would not have such a negative view of game.