I guess I have to be very precise.
The factory meaning OWC or "Other World Computing". I bought both a SODIMM 1gb stick and a DIMM 1gb stick for my rather outdated "poor substitute" for a MBP.
In reality I just would like an honest answer to the question. Im digging around on google as well. I know they unofficially support 2gb, so I wasn't sure if the computer is just displaying 1.5gb ram in system profiler but actually having 2gb. Or if I truly received a 1gb stick and a 512mb stick on accident.
FYI I am very happy with my absolutely gorgeous iMac G4. This has to be the most beautiful computer I have ever laid my eyes on. This is 95% the reason I bought it. The other 5%? Light browsing and music. As far as I can tell this is going to be a beautiful relationship.
Firstly, "unofficial" means it may not always work. Secondly, you may have received the wrong product or the product you received isn't working properly. Thirdly, have you tried installing one single module at a time in each socket to see if the computer recognizes each module as 1 GB of RAM.
If each module works properly without the other one installed, then try swapping sockets. If that does not work then the memory controller in your module simply won't recognize the full 2 GBs. In that case you need to talk to the OWC techs for suggestions.
Based on your comment you don't have two matched modules, and that may be a reason for the problem. Hence, you need to talk with OWC.
I hope this is an "honest" answer.
Another thought about your iMac only reading 1.5 GBs of RAM and not the 2 GBs installed.
I was just looking through some old notes about G3 iMacs and firmware updates, and one of the fixes listed on that firmware update was so the iMac would recognize all the upgraded memory.
I never owned a G4 iMac, so I don't know what version of firmware it has, if there was ever a firmware update, or if this would even apply to your situation. I just thought I'd mention it.