A project like this is impractical, expensive, and difficult, but it would be so cool to do.

I have thought about doing this with my G4 iMac and have done a lot of research into it. It certainly is possible to fit all the components into the base of the iMac, although the ports wouldn't line up correctly. The major problem, and the reason why no one has done it that I know of, is the screen. More specifically, the wiring. The display on the iMac uses a proprietary connector and wiring setup. Unfortunately it is virtually impossible to adapt the wiring to any standard DVI or VGA plug. Furthermore, even if you were to replace the wiring and the screen, the opening in the neck is far too small to run a cable through. Further-furthermore, the neck is impossible to disassemble without a special tool, and even then it will never be the same once put back together.

It's an awesome idea and I would love it if someone could figure it all out and get it to work, but it would take a great deal of knowledge and time, and isn't something I would want to try.