I put a Pioneer DVR 110 superdrive in my G4 iMac a few months ago - sourced from eBay for $15, and it works perfectly - and is the same size as the original drive which was not functional.
It is a very, very, tight fit in the casing, and takes a bit of patience to get it in place, but is well worth it.
I also replaced the original HD with an SSD while I had it apart, because it didn't seem it would be a lot of fun to take apart agin later! That's made it a bit faster, and much smoother to use. Because the SSD is smaller than the original HD, even with adapter, so that fits much more easily.
One thing about the fan - don't forget that you'll need thermal paste when putting the thing back together, otherwise it can heat up and trip the fan very easily. Make sure the old thermal paste is cleaned off first, and that the heat pipe is properly fixed across the top of the CPU.
I haven't needed to try with mine, but I think the monitor arm can be tightened with the right implement.
ON EDIT: You can put an SSD in the system without a working DVD drive. You'll need to have some way to connect the SSD to a USB port (I put mine in a drive adapter), and then use Carbon Copy Cloner or SuperDuper (my personal favorite of the two) to clone the existing drive to it. I did this, and then switched the drives. The iMac booted just fine from the clone on the SSD.