I have the new 27" iMac (see specs in my sig) and I have been very happy with it. Not sure how my 2.8 i7 compares to yours, but iMacs are good. Just be sure you get your render & edit codecs in order to speed up rendering!
I have been very happy with my iMac, but I don't do HD footage editing and from the time I have used it I nearly killed the poor thing in Motion.
The only limitations I find annoying that I only recently found out about in the last week even, were the inability for the iMac to output CC data via the internal firewire. Now there are decks that will support it and read CC data over FW but I sadly do not have one so you would need an external card that could take the data and throw it onto line 21 for you.
So if you are looking to do SD or very basic HD and don't need to cut an 3 hour epic piece I would say it is fine. Besides the entry point is a LOT cheaper than the cheese grater (MacPro).