Apple wouldn't put the 9400m in their iMac if it wouldn't be able to power the 1920x1080 resolution, it even powers my 17" MBP with 1920x1200 pixel witout problems.
The dedicated ATI graphics card though is better if you wanna game a lot or do heavy graphics work or other image related stuff in applications that take advantage of the graphics adapter.
But the 9400m will be fine for most things too. I do edit 12MP RAW photos with it on my 17" MBP without major hiccups, but a dedicated graphics card like the ATI would allow you to have open more 12MP RAW photos at the same time.
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EDIT:
what about HD videos, such as youtube HD? im not very smart with this stuff haha
The HD YouTube videos rely more on CPU as they are embedded in Flash, one of the more ridiculous software titles on earth as it is poorly designed on the Mac side of life.
Just watch a normal YouTube video on a Mac and see how the CPU usage seems to spike.