I have the HDR SR12 (larger hard disk but otherwise the same). It is recognised by FCE4 when importing and everything works fine.
I edit using a unibody Macbook PRO (Late 2008) with 2.8GHZ Core 2 Duo and 4GB RAM. I have no problems editing at all, but be aware render times can be very long (hours).
This is because the files get very large. One hour of video on the camera (AVCHD) will expand through the FCE Apple Intermediate Codec to about 44GB on disk. A 1.5hour movie will export to a 60GB file (this will reduce to 4.5GB on DVD of course). The files are huge.
Accept this and your iMac will be fine. The 27" display will make editing a breeze.
Couple of extra points;
Do you know FCE4 ? If not take a look at the free video tutorials on Izzy Video.
The recommended set up is to have your scratch files (inc render files) on a separate disk to your OS disk. This generally means an external disk, and you should choose a firewire 800 interface. USB2.0 will give you errors with FCE4, and even if you dont get errors the render times will be protracted.
Additionally, choose a hard disk with 7200rpm spindles. Most pre-packaged disks only have 5400rpm spindles so I always buy an empty enclosure and specify my own hard disk.
Hope this helps. I can only speak from my own experience and yes it would be nice to have a quad cpu system but the cost is so very much higher and for me, not justified. I just render overnight.
Enjoy your iMac and FCE4
Russ