Without seeing the image it is difficult to be certain. Two possibilities come to mind - one is that the iMac was left in the presence of a strong magnetic field for a long time, in which case sufficient time will fix the problem on its own. The iMac's CRT de-gausses itself every time it powers up. If it had been in storage for a long time I think this is a likely cause, and since fixing it involves doing nothing, the easiest to address!
If it doesn't get better I would suspect the iMac was dropped or otherwise abused such that the CRT is in need of alignment, something that is performed when it was assembled and never intended to be perfomed ever again. From what I understand that is an incredibly tedious exercise, generally considered not worth the effort.
Here is a website that may be useful: http://home.earthlink.net/~strahm_s/manuals.html
There is a display adjustment utility that may be applicable to your needs, but it appears to predate OS X. It might run in Classic. Also see if the iMac can boot OS 9.
Another possibility is to find another iMac with a compatible monitor, given away or sold for reasons other than a bad CRT.
Good luck!