I running FCP3 on my iMac. It works well for simple/basic work, but limits you as to what kind of work you can do. I have done plenty of SD editing on this system, no HD yet. Not sure I would try either. You have no video output monitoring.
Can you edit with it, yes. Would I make it my production computer, NO. Motion is SLOWWWWWWWW!!!! It works, but it is not a professional, production piece of equipment.
I am currently running 4 iMac (2007) with leopard and FCP 3 and it works fine. I do have some slower rendering issues but am maxxed at 4GB Ram. It will do what you want but beware of tryig to network the new imac7's they dont like it I hear.n
I use my 27" iMac 4-core for HD video editing and I love it! Performance-wise, it feels exactly the same to me as editing on my 8-core Mac Pro, but that gorgeous 27" screen and the magic mouse just seem to make for a much more pleasurable editing experience.
Granted, there are two potential deal-breakers with this machine: the network chip they use is not capable of jumbo frames so you're not going to get acceptable throughput if you're trying to access large files over an ethernet SAN. And you obviously can't install a Kona or BlackMagic card for a broadcast display.
But since I deal exclusively with local storage and edit HD for non-broadcast delivery, it's a dream machine for me.