OP: Richmon said it sounds like the boot ROM. Couldn't be that much $ on eBay. They're socketed, right?
If nothing else, you could hide out a bit and prowl eBay for a Sonnet Harmoni board. That'd get that iMac into good, functional shape.
You could run Linux on it. Don't think X11 would be that good, but you could always turn it into an
Ampache server for your music (my favorite idea), an Apache webserver, get good with your UNIX-y CLI skills, if you aren't already (always a nice bonus for OS X)...
Any reasonably modern computer can be useful for something. I'm not much for games and hate the classic OSes, but you could have a lot of fun with it if you want to get your feet wet.