Can the people ignored know who is ignoring them or not?
No.
Neither can Mods.
yeah, but we cannot ignore you and Nick
(but I cannot imagine why I would want to ignore Nick) 
EDIT
the other bummer is if somebody quotes the ignored user, you can then read the post
I'd like to help you out, Pete, but I'm currently ignoring you
I think there might be a way around that with nested quotes. I'll look into it, but if someone quotes an "ignored" user, then there's not much that can be done. The mod is not that "smart". But the nested quote may work if the quote is from another user that quoted an ignored user.
but don't quote me on that
