I don't think this can work.
A boot drive created on an Intel Mac won't boot an Apple Silicon Mac.
Even if it's "the same version of the OS".
The necessary OS resources "arent' there".
Other possible problems:
If the external drive is a platter-based hard drive, Apple Silicon Macs may not boot, either -- the drive is simply too slow to handle it.
An SSD is pretty much required.
If you want an external boot drive for an Apple Silicon Mac, what you need to do is:
1. Start with a blank external SSD, connected to the AS Mac
2. Format it to APFS, GUID partition format (with disk utility)
3. Now boot to recovery on the AS Mac
4. MAKE SURE system integrity protection is disabled, and also disable all "startup security".
5. Choose to "re-install" the OS, but when the installer asks WHERE you want to install, install onto the EXTERNAL SSD.
6. When the install is done, you should be booted to the new install
7. Now connect a backup (or external boot drive) from the OLD iMac
8. When setup assistant asks if you want to migrate, YES, you do
9. Point the way "to" the backup drive
10. Give setup assistant time to digest things.
11. Select what you want to migrate and let SA do the job.
12. When done, you should have a bootable AS-based drive with your "old stuff" on it.
Yes, it's "a long process".
But I don't believe there's any other way.