Well it's actually part of the formula. Its 25% your own record, 50% your opponents record, and 25% your opponents opponents record. If you lose a game, obviously you help the category responsible for the largest share of the calculation. Certainly RPI is not gospel, but it is helpful when comparing teams with similar records like Indiana and Iowa.
Not terribly different from strength of schedule. Had we lost to Purdue and MSU twice, Purdue would easily be top 10 right now and MSU top 3 minimum. Our SOS number would be out of this world. That's why Iowa State always has their excellent SOS number in football. It helps an awful lot when you inflate the record of your opponents by losing most of the time AND you never have to play one of the bottom feeders in your own league.