What method did you use to put the linux system data on the Flash Drive? The flash drive has to be created from an image that is bootable, just like a cd/dvd. If you just copied all the data to a flash drive the iMac will not see it as a bootable drive.
Depending on what distribution you are using the easiest method I have always found is to run the installation from cd and install linux to the USB flash drive instead of the hard drive. The installation will write all the necessary boot info into the file system to make the drive bootable. Then you should be able to 'Option' boot into the flash drive. It's worked for me in the past, your mileage may vary.