Is iWork for iOS a real office document editor?
There surely is a risk for data loss, mostly in the formatting of documents. As you suspected, the files are converted when opened (and saved) to the iWork format. Certain features in Office aren't present in iWork, such as SmartArt or VBA applications.

For handling simple letters it could be a compliment, but for business critical documents that shouldn't change their formatting all the time I would stick to one of both. Since your employer decides what you use at work I don't think iWork would be a very good option in this case.