I don't think there is any problems using PC2700 DDR SODIMMs in your iMac. My 1 GHz iMac has PC2700 DDR RAM in it. That RAM came free with the iMac. However you will NOT see any speed improvements by using the faster RAM.
Yes it is possible to access the inside of your iMac. I WILL void the warranty on it unless you take it to an authorized Apple service center and have them do it. So if you screw something up taking it apart or putting it back together YOU will have to pay for it to get fixed.
Here is the link to take your iMac apart:
http://www.xlr8yourmac.com/systems/iMac_g4/imacg4_takeapart.html