this is a great machine for editing video unless your a professional filmaker that do big things then get a mac pro
but for the imac i would go with a 24inch because you get better graphics, but wait until the imac update happens.
And you would want to max out the ram in the imac.
As for HD, video editing: you would need a raid 0. You could hook that up with firewire 800 by using for say two 500 GB firewire 800 drives and then raid them using disk utility, and your in business for a good editing rig.
HD is not great...
it does work but not great. in Final Cut Pro.
apparently Adobe Premiers Latest version handles the HD very well. in fact I hear it blows FCP out of the water.
but I use and love FCP so I choose to ignore this advice for the time being and stick with non HD video projects... none of my customers have HD DVD's anyways....