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Yes, I'm positive. They came out with them to basically replace Apple's older all-in-one offering, the Powermac 5200/5400 series.

And it was definitely the first computer I had seen with the translucent plastics. And I was there for the introduction of the iMac.
 
If the AIO had USB in it, it might've actually made a better iMac than the iMac. Less forward-thinking yes, but PCI would still be nice (not lacking them, but nice) on the current iMac imho.
 
Ah, the G3-AIO... the 60 lb monster we ("typical" non-athletic) geeks had to lug around campus for all the freshmen who bought them ("jocks" included). It's a peculiar service the college's computing services provided...

According to http://www.apple-history.com it G3-AIO preceeded the iMac by 6 months (March and August 1998, respectively).
 
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