Hi,
Try going here for a start and use this for a guide:
http://eshop.macsales.com/shop/imac/
I installed one in a Grape iMac Slotter a few years ago along with Panther a signifivcant upgrade from Jaguar, and 1 GB of Ram. I bought a 120GB on sale for $70. after rebate. If you're not in a hurry you can find great deals on huge HDs 250-for $89 or less, 300 for $100 or less but most of these are including a rebate. You may check out dealmac or dealnews.com outpost.com or I'm sure someone else here could recommend another source.
Before you start tearing into that iMac "BE CAREFUL" there are quite a few things in that case housing high voltage and could put you closer than you may like to your maker!
Dig around the 'net for a "take apart guide for iMac G3" or something phrased along those lines. They're very helpful and if you look hard enough they're a free download in PDF format.
My best answers to your questions:
1) Double check me on this one but IDE should be the right type of drive and I believe ATA not SATA are the same as IDE.
2) The drive I put in that iMac had a 8MB buffer and 7,200 rpm platter speed and although it didn't boot quicker it was faster surfing the net on dial up and very fast on DSL. I compared it to my iBook G3 466SE with a 60GB 7200 16MB hard drive and 576MB of ram. I think the bottle neck on my iBook was the bus speed of only 66mhz vs the iMac @ 100mhz. I've used Seagate, Hitachi, and Western Digital and all have performed with no problems. The 10GB I removed from both were very noisy but as the new drives fill up with apps, games, music and such the noise level will rise but not nearly to the level of the old drives. I've read that it wasn't recommended to use a very large and fast HD as it creates too much heat for a fanless iMac and iBook. I've had no problems to report on that. I made sure the iMac was on a swivel stand worth the few bucks on eBay and a tilt and swivel laptop stand/riser to help 'em breathe along with good ventilation. Both were mostly used to do the things you are interested in.