Processor Speed vs. RAM

Alright I've decided to go with the Core2Duo iMac (vs. a PowerMac G5) but can't decide whether or not to get (both from ebay btw) a 2.66 Ghz 20" with 2 GB RAM or 2.4 Ghz 20" with the full 4 GB RAM. I'm going to be video editing and using Adobe Creative Suite primarily. I'm currently leaning toward the more ram since 260 Mhz doesn't seem like a very large deficit in the grand scheme of things.

Any advice, is my logic completely flawed?

Yes, I think it is flawed. The 2.66Ghz will give you faster processing, upgrade the memory to 4GB and you will have a great machine

True, RAM is the cheapest upgrade.

Yeah, remember when you're buying this iMac, think of what CAN be upgraded, since you are limited to what exactly you can put in your computer. Since the CPU is a pain to install (believe me, I've done it, voiding my warranty), might as well go with the sure shot for the install. You can always upgrade your RAM later on, doesn't necessarily mean you have to upgrade it out of the box.