Can Pages for iOS do Outline Documents?

It can. I too use outlining extensively for my work. I got my iPad today, and immediately downloaded iWork Pages to import and edit a MS Word file in outline form. It worked great, and conformed to the existing outline formatting. To create a new document, there are minimal but adequate options for outlining. You can create lists that are numbered or lettered, and the outlining will function automatically. You can either use a menu-based tabbing feature to adjust outline levels, or you can actually grab a line of text and drag it horizontally, and Pages will automatically adjust its outline level accordingly. Not as robust as Word, but it does work well!