I, too, have been to Amsterdam and heard 'hi' said a lot. The reason for this is that sometimes people prefer to use a slang pronunciation such as "I'm gonna go here" instead of "I'm going to go here." Also, Dutch speakers tend to be fluent in English as well, so if they noticed you spoke English, they might interact in English as well to make it easier for you.
Well, as it's not originally a Dutch word, it introduced a sound that Dutch doesn't have: A long closed o, whereas in Dutch a long vowel, as it is, is always open. It's no wonder pronunciation is a bit wobbly as a result, especially since the word is too short to give you much help.
Well, it's more of a remnant of the Canadians liberating much of The Netherlands at the end of the Second World War: "How are you.". In areas where they stayed for a longer time, you can still hear that the first two words have fused, as in English. (Of course,the English speakers knew what they were saying, whereas the Dutch did not.)