Reputation Points: Other users can ADD points for positive behaviour, and they can SUBTRACT points for negative behaviour. Your Reputation Points is the sum of these exchanges. The more points you have, the more the community probably agrees with you (they gave you the points after all). This is shown as the little green 'pips' under your name.
Reputation Power: This is a measure of how much influence you have when giving Reputation Points. Your power is determined by how long you've been a member, how many posts you have, the number of Reputation Points you have and other factors. With a Reputation Power of 10, you can ADD or SUBTRACT 10 Reputation Points of other members. Your Reputation Power is shown beside the green 'pips'.
It is possible to have 1000 Reputation Points, yet only have a Reputation Power of 1 (everyone must like you, although you don't have much power yet).
Likewise, you could be the most influencial member on the site with a Reputation Power of 1 MILLION (will that ever happen), but if no-one ever gave you any Reputation Points you'd still have a low reputation.
Hopefully that's helped clarify.
Anyone found to be abusing the Reputation system may find their Reputation Power/Points 'adjusted'.