I just read some interesting reviews about the iLoud. A professional review by a magazine (in German only) states that the 40 watts are RMS. Regarding the clarity and neutrality of the sound, they rate it highly.
In several reviews I read that the maximum sound pressure is really high in relation to the size, but not without distortion at high volumes. A user compared it directly to the Bose Sounddock portable, he says they have a comparable SPL, the Bose being a bit less dynamic at very high volumes, but having better bass frequencies and no distortion, whereas the iLoud obviously has no limiter that would prevent distortion.
In Thomann reviews I read that some units are faulty and distort at medium volumes when playing piano sounds (someone exchanged it with a replacement unit and didn't have the distortion then).