As the dremel junkie mod is my mod, I can assure you that it is not that difficult, nor that expensive. In fact, depending on your goals, it may be the cheapest option for upgrading available. I would not bother upgrading to the 800mhz mobo (there will be no discernible difference) nor trying to track down the Daystar CPU or purchasing a working 1.25Ghz PPC G4. The reason is that the problem is the Power PC. It is no longer supported, not even by apple. No new software is written for it, including browsers. Web video formats and plugins are not optimized for it, if they even work at all. This will only continue to get worse.
I know this may seem daunting, but for less than $20 in materials, you can turn the video cable that plugs into the iMacs motherboard into a DVI cable. No soldering required. I have a very detailed step by step for the 17" version (but I have the pin out for the 15" and can talk you through it). It can be done in less than an hour and involves pushing 14 pins onto a dvi connector, connecting 3 wires and a resistor, then using 4 or 5 alligator wires to hook it to a molex connector and plug that in somewhere (even a molex to AC wall plug adapter). The reason it's so easy is that apple has already put a DVI cable through the neck (it uses TMDS, the same signaling) you just have to put the pins in the ight place of a dvi connector and add power.
The rest is up to you as to what to upgrade it to. Some options include:
1) Connect the DVI to the back so that it can hook up to an external computer. I use a 20" iMac G4 (modded) as a monitor for a Mac mini. I added a USB optial drive to replace the one missing from the 2011 mini. I love this setup.
2) Use this as a wired or wireless (with a wireless DVI USB dongle) second monitor for a laptop. Or put an apple tv in the base and use it as an airplay receiver.
3) Add a small motherboard as I have done to make it an all-in-one, most expensive, but depends on what you choose. This will have to be a hackintosh if you want Mac OSX, but you are free to run any OS you want. Run Windows, Linux, or even HTPC software like Boxee or XBMC.
I began this project because I like you, love this design and wanted to keep using it despite the outdated computer inside. Do not waste money on minor incremental upgrades to obsolete architecture. Instead make this DVI compatible so that you can use its ergonomic design with any computer (inside or outside) you see fit. I've worked hard to make this as simple as possible and if you can assemble a computer from off the shelf components and strip and connect speaker wire to a home stereo system then you can do this. Hope this helps. JB