should be no problem at all
AFAIK the iMac can handle up to 1.5 gig systemwise, just as the G4 can, my walli is running with 256 MB so apple said so apple said it wouldn't, my 6100 is happy with 136MB and apple said 72 was max...
You won't fry your iMac trying it, if it doesn't work, the mac will simply not start up, you put your old RAM back in and it will work again

it's just untested by the fine techguys at apple, because the RAM was not available at the time testing.
and yes, a friend of mine is running hi iMac DV with 1ig of RAM at the moment