It is possible to put a 7600GT in place of the stock 7300GT.. I've done it.
The problem is securing the part, and braving the total tear down of your iMac!
Where the video card is located requires just about every piece of the system to be taken apart 🙁
It was a fun little task, probably not something I should have done on my only computer, but I the 7600GT is a worthwhile upgrade.
One thing I'd love to try to find is an 8600GT card, I know they come in an MXM-II flavor (which is the size of the card in the White iMacs) and get a donor bios from a MacBook Pro, and just mess with it. I'd be pretty sure it wouldn't work, but it would be fun to try.