Regardless of what you end up doing, it might be a good idea to upgrade the OS, at least to High Sierra, on the internal drive to make sure you install the newer firmware. After that, then you can shuffle the various OS around to the drives you choose.
Also, regardless of the OS you choose to use, I would go with an external SSD versus using the internal Fusion Drive. The HDD of your Fusion Drive is getting really old. The SSD is probably also heading towards end of life as well.
The winner (between fusion v. SSD) is where your "main OS" should go.
I wouldn't say that this is a universal way of picking the best drive to use.
Newer iMac 1TB Fusion Drives with only 24GB or 32GB of an SSD portion can get impressive BMDST numbers, faster than an external USB3 Gen2 SSD. But, I would still recommend going with the pure SSD.
Also, BMDST only does sequential reads and writes, which for boot drives, I think random would be a better metric.
A good example is comparing an internal SATAIII HDD versus an external FW800 SSD. A newer HDD would destroy the FW800 SSD when it comes to sequential reads and writes, but at random, the FW800 SSD would be a lot faster. For use as a boot drive, the FW800 SSD would feel a lot more responsive, open apps faster, and boot faster than the HDD.
Not this applies to the OP and his Late 2012 iMac, but for anyone else that reads the thread looking for advice on their different Mac, it might be helpful to point out that straight BMDST numbers don't tell the whole story, especially for boot drives.
I like AmorphousDiskMark, as it tests both sequential and random.