I guess another way of asking my question is, which has better graphics performance: a 20" 2.66 with 4gb ram or a 24" 2.66 with 4gb ram?
They are going to be exactly the same in performance.
The only reason the 24" costs more money is cause of the larger screen size, HD, and RAM.
Given that, just spring for the 24", I am pretty sure it will be able to handle HD broadcasts. My GF's Dell 1405 with a 1.6 Core Duo and 2 GB of RAM (and Intel GMA graphics) handles HDTV broadcasts through one of those USB TV tuners just fine, so I have no doubt that any of the new iMac will.
I say get the 24" because it will be a much nicer viewing experience. You can also do full 1080 HD on it since the resolution is 1920x1200 (1920x1080 is HD resolution). On the 20" you can only do 720 HD because the resolution is 1680x1050, 240 pixels short of full HD.
I think that is what people were talking about earlier as you mentioned about the 20" not being able to handle HD. It wasn't a technical performance thing, it was more of a screen resolution thing.
That said, the 24" panels are also of a higher quality than the 20", their colors do not wash out, and it has a very wide viewing angle. A much better experience overall.