you have a 1st gen MP -- so thats what, almost 3 years old and it still has the *stock* 1 gig ram and video card (and drive too I bet?) -- but you decided to keep it because of its "expandability" but you have yet to expand anything on it?
that logic just fails me?
An LED monitor is still an LCD, it just uses LEDs rather than cathod rays.
You dont need a new video card to run a new Apple monitor, just a $30 adapter.
$1100 isnt bad for the 2.66, I would probably snag it if I was going to use all of its power (multi drive RAID, big giant video, eSATA externals, lots of video ripping/encoding) ... otherwise a new iMac with a 1 year warranty, rather than a 3+ year old MP makes a lot more sense...