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Examples:
Ilvl 90 + Clvl 4 x .4 = 36 + 1 = Ilvl 37
Ilvl 37 + Clvl 4 x .4 = 9 + 1 = Ilvl 10 (which is way too low for any useful mods)
Ilvl 90 + Clvl 80 x .4 = 36 + 32 = Ilvl 68.
Ilvl 68 + Clvl 80 x .4 = 27 + 32 = Ilvl 59
Ilvl 59 + Clvl 80 x .4 = 24 + 32 = Ilvl 56
Ilvl 56 + Clvl 80 x .4 = 22 + 32 = Ilvl 54
Ilvl 54 + Clvl 80 x .4 = 22 + 32 = Ilvl 54 (Ilvl stabilizes here, after 5 trials.
Ilvl 90 + Clvl 99 x .4 = 36 + 40 = Ilvl 76
Ilvl 76 + Clvl 99 x .4 = 30 + 40 = Ilvl 70
Ilvl 70 + Clvl 99 x .4 = 28 + 40 = Ilvl 68
Ilvl 68 + Clvl 99 x .4 = 27 + 40 = Ilvl 67
Ilvl 67 + Clvl 99 x .4 = 27 + 40 = Ilvl 67 (Ilvl stabilizes here, after 5 trials)
The Ilvl will always drop somewhat, and stabilize at 67.5% (roughly) of your Clvl after 5 trials. So you want to use your highest level character, and you can never get +2 skills on a rare amulet with this recipe, no matter what Ilvl and Clvl are involved. The +magical level bonuses on Circlets are added at the end. These don't effect the Ilvl, just add to the max potential Alvl. So an Ilvl 67 Tiara would get the +13 and be Alvl 80, equivalent to an Ilvl 80 item in terms of potential mods.