Right, the inner loop ends at the i_ref signal. You could drive that signal from a whatever, and get a controlled proportional input current to your heart's desire. In this case, they drive it from a separate outer loop, which is used to regulate voltage over long time scales -- note the outer PI unit must respond slow enough so that it doesn't try to regulate over mains-frequency ripple -- indeed, the output ripple is a critical aspect of a PFC, as the variation in C_L voltage reflects the variation in input power that's necessary for the PF ~ 1 condition from a single-phase source. Because the right PI output is varying so slowly, we can vary it proportional to input -- by multiplying by |Vac| -- to get a current proportional to input, thus satisfying the PFC condition.
The rms multiplier isn't critical, but without it, the loop gain is all over the place (for one, varying with |Vac| of course) -- it serves to keep things stable and responsive as input voltage varies (mains voltage tends to dip and swell over time, as loads go on and off throughout the day). The critical insight here is, the right PI's output is just whatever current it wants to keep its capacitor topped up, but the input current must be proportional to instantaneous voltage, and inversely proportional to rms -- because it must draw more current at lower Vin, but the output voltage loop doesn't know or care about input voltage. Put another way, the output voltage is fairly stable (typically 400V), so power is proportional to current; but input current, at constant power, is inversely proportional to voltage, so we need to divide to get the right current. And we divide twice (hence the square) because |Vac| is in there too.
So yet another way to look at it, is dimensionally: the right PI output could be seen in terms of output current (or rather, a voltage representing that current), but since its voltage is constant, it's also proportional to output power. We multiply that power by |Vac| to get the waveform needed, and then divide by Vrms^2 to get current again -- the required input current. (Again, expressed as a voltage. Which, note also that the current loop is a transconductance amplifier: as an output, it controls mains current flow; its input is V(i_ref), so it has gain in units of A/V = S, [trans]conductance.)
Tim