How does it compare to the CanonA540 for picture quality?

CNet likes the Nikon's image quality over the A540, but does point out negatives re: the L1's responsiveness and usability. But if you're only interested in image quality, it looks like the L1 is better:

CNet info:

Nikon L1:
Where the Nikon Coolpix L1 shines is its image quality. It produces sharp, well-exposed images with natural color balance and pleasing flesh tones. At its widest angle, there is minor vignetting, in which corners of a picture are darker than the center, and barrel distortion, in which straight lines curve outward at a picture's edges; such distortions are almost invisible at the telephoto end, though. The L1 is very strong in macro photographs, where the detail and the sharpness of the lens-and-sensor combination really show. Blue fringing occasionally appears around high-contrast lines but only under extremely challenging shooting conditions, such as taking pictures of bare tree branches or shooting into the sun.
Canon a540:
We like this camera's photos, which are quite good for its class. The exposure system tends to favor shadows at the expense of highlights; dark areas have lots of detail, while bright areas wash out. We found less chromatic aberration than we expected with purple fringing around backlit subjects surprisingly absent. Flesh tones were often warm, but other colors were fairly accurate, if muted. Flash exposures tend to be a little warm, and automatic white balance sometimes produces reddish casts under incandescent light. As you might hope, noise levels were low at the minimum ISO 80 sensitivity setting and rose significantly at ISO 400, but the images were still tolerable when we boosted ISO to the maximum ISO 800.