The more I think about it the better this idea seems. Of course it won't be an actual iMac (ie no computer internals) but a monitor with a slot for your laptop. It might end up looking like an iMac, with the chin and all, which is probably necessary so as to provide the physical space to accommodate the laptop, as well as speakers, ports, etc...
Someone earlier asked what advantage this would be over simply connecting to a monitor. Well, one huge advantage is that you call leave all your devices connected to the dock and never have to think about unhooking and hooking them to the macbook. Just slide out and go. Just slide in and continue.
It would also mean not having to use your magsafe adaptor so you can keep it in your laptop case for travel. This alone is a big plus. I find it a pain to have to unhook the power brick and bring it with me and I'm sure I'm not the only one who has accidentally forgot it at work or a friend's house. Not needing it at home will solve that problem.
Another feature would be that the dock could have so many more connection options, including all the firewire and usb you'd want.
And the dock's built in speakers would likely be a lot better than the MB or MBP speakers and would be enough for some people not to buy new ones, thus eliminating the need for more speakers and more clutter.
The docking station seems to tie together some of the rumors and pictures so far and to me it makes a lot of sense. My only concern would be heat dissipation and the potential for the screen to become damaged or warped because of the heat and from being in clamshell mode all the time. But I'm sure the engineers would have worked that out.
I like this idea and I hope it works out.