I don't know if it's a glitch. I mean, NEI does look to the client for recipes, not the server.
So it makes sense that I see the hard recipes regardless of any changes to the server settings.
That's weird, because when I change the GT settings to easy recipes, it still shows the hard recipes on the server. That is unless I change the settings on my client too.
If you changing Gregtech settings for an SMP server, won't all the players/clients need the same config files for it to work? It seems like a massive hassle.