This is the same exact upgrade I made, and I've been more than happy with the decision. However, I kept the XTi instead of trading it in- it's nice to have an extra body "just in case".
"I just got my first flash last week - 580exII... should I learn how to use that for bettering my night football captures, or would the 40D's ISO handling make enough difference to take the leap?"
It depends on just how dark it gets. But even then, I've found that the flash (I'm using the 420) communicates more accurately with the 40D than the Rebel, resulting in sharper and fewer blown out shots.
Overall handling and performance, the 40D is a significant upgrade. Higher iso (plus several more iso options inbetween), faster af, better low-light handling, more than double fps- (3 vs 6.5), longer battery life, much sturdier body, and then there's the external controls, which are much easier and faster to navigate than internal menu functions, plus there's the option of shooting in sRAW (small RAW) in addition to traditional RAW (1/4 the image size or RAW provided you don't need that large of capture)... Yep, the 40D.
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