Power Attack bonus damage is indeed multiplied on a critical hit.
This is, of course, balanced by the increased difficulty of inflicting the critical in the first place with the lowered attack bonus, which is a double-whammy of sorts, as it is lowered for both the attack and critical confirmation rolls.
Now, you want to get really nasty? Try a weapon master using Increased Multiplier, power attacking for +20 (with true strike to compensate) with, say, a mercurial greatsword wielded from horseback (Spirited Charge). Add an energy burst effect to the weapon for extra fun.
x4 base + x1 increased multiplier + x1 spirited charge = x6 critical.
That's 120 points of damage before you even touch the dice. Add 12d6 for the mercurial greatsword, 1d6 for the energy enhancement, and 5d10 for the burst effect. And don't forget to add (and multiply) your Strength, Specialization, and enhancement bonuses.
Nasty, isn't it?