These system can do a fine job especially with DV footage. Use good FW800 drives (I really like OWC macsales.com drives).
If you want to monitor to an external video monitor look into the Matrox MXO.
The one issue is capturing since the iMac only has one bus sometimes you get dropped frames since the drive and the deck are on the same bus. If you run into problems you can hook the drive up via the USB2 when capturing, then go to FW for editing. USB is not the best for MAC and editing but it does work.
With all this said, if you are buying a new system it is much saver to get the low end tower and a non apple 23″ monitor and be safe for an extra grand, but not everyone has an extra grand.