Yea, go for 10.2 it will run much better on the imac than 10.0.4. I have manged to run 10.3 on a 233 imac with 96 mb ram. Used it as a server for some time, so don't really know about the performance of the user-interface...
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- iMac g5 2ghz, 1.5gb ram.
- eMac 1ghz (clocked at 1.27): 1gb RAM, Dual Layer Pioneer DVD +/- RW, 80 gb HD, 160 & 250 external Lacie FW HDs. And modified cooling.
- iMac 600 mhz
- b&w in atx case, with sata drives :p
- PowerMac g3 b/w - with atx psu
- PowerBook G3 Wallstreet