Installing MacOS on external USB 3 SSD

I assume you mean the 21.5 inch iMac without a fusion drive.

The drive is the slowest thing on a computer these days and there's really no excuse to be running the system on anything other than an SSD (or at least a fusion drive) connected to the fastest available bus on the unit.

It seems like the cheapest iMac available is never a great choice.

 

It'll work very well. SSD real-world performance boost predominantly come from the instant access times, so a slight deficit in read/write speeds won't have much noticeable effect, especially if you're used to HDD performance!

Also couldn't be easier to set up:

1) plug in SSD via USB
2) hold CMD + R on startup
3) format SSD in disk utility
4) select reinstall macOS & point it to the SSD
5) laugh maniacally at the ease of drastically improving system performance (optional)

 

OP wrote:
"I was looking at an iMac but perhaps getting one with a standard hard drive and then using an external USB 3 connected SSD to install MacOS onto."

My advice is "don't do this".
Spend $100 more and get the iMac with the 256gb SSD (you have to do this through "build to order").

The internal SSD will be 4-5x faster than any external SSD. VERY fast.

I recommend booting from an external SSD for older Macs, but the new iMacs have such a great internal SSD it's the best option.
And did I mention that you can get the 256gb version for only $100 more?

 

I need to get a weather report for hell because it's gotta be snowing there today.