no - not really.
or better - not with apple hardware.
sure - you can take everything out of the iMac and replace it with newer parts. but everything must go.
even [http://dremmeljunkie.blogspot.com/|dremel junkie] didn't go all the way with his mod's.
you would need a new monitor (if you have a 17" with an aspect ratio of 16:10 - like the hanns g. lcd's)
a new mini itx mainboard - they will fit into the iMac - but watch out, there are i7 mini itx boards on the market, the cpu's are expensive and the main problem with them is the heat they produce.
i have a "simple" core2duo mini itx board for my iMac project.
it's smaller than the usual mini itx - that way i have a little more space for all the cables i have to put in, my board has 2 vga and 1 hdmi output, but one vga is needed to connect the hanns g.
it's way to much work to explain it that fast
the good part is - my system (10.6.3)is up and running - i "only" have to build everything in the iMac
and one thing - the price of the iMac depends on the parts you want to use. but maybe ther would be another option with a MacBook logicboard - but that would be not easier to build in