The Bonanza was substantially damaged by impact forces and a post-impact fire while both the ATP-rated pilot and passenger were killed following a loss of engine power. Visual conditions prevailed for the planned IFR flight from the Manitowoc County (Wis.) Airport to the Lewis University Airport in Romeoville, Ill. Preliminary information indicates that at 1006, while at 4000 feet msl, the pilot declared an emergency with the Chicago Air Route Traffic Control Center, stating the cabin was filling with smoke and that they were diverting to the Sheboygan County (Wis.) Memorial Airport (SBM). Subsequently, the airplane contacted trees at the edge of an open field in Howards Grove, Wisconsin, approximately 3 miles north of SBM. Preliminary examination revealed two holes in the top of the engine case abeam the #4 cylinder. The larger of the holes was located on the left portion of the case and the smaller of the holes was on the right portion of the case. The journal end of the #4 connecting rod was sticking up through the larger hole. The end of the rod that was sticking up through the case had sustained impact hammering damage. The piston end of the rod remained connected to the piston which was inside the cylinder.