I'm curious about this to, since the GPU is a swappable card it should theoretically work, getting a 4850 will be the only problem or iFixit will make it possible ;) Love to see someone trying this! With the processor upgrade and this one, you can make a though iMac that almost is equal to the i5/i7 model! For the CPU upgrade, see I am thinking of upgrading the current Core 2 Duo 3.33GHz to Quadcore, here we talk about upgrading from a dual-core to a quad-core.
That is something I doubted about to, but the 3,33GHz E8600 model is a 1333MHz, just like Q9550s. I think the firmware of the iMac will change the clock ratio for the processor to let it run at original speed. E7600 = 1066Mhz > 3.06Ghz E8600 = 1333Mhz > 3.33Ghz Let's say the Q9550s is in my opinion the most equal to the E8600 in specs, If this would work it will be a nice upgrade!
I have a iMac 21,5 to and I'm also interested upgrading my E7600 to a Q9550s if this is possible. Since the Q9550s also uses 65W just like the E7600/E8600 and the bus speed is the same as the E8600 (1333MHz) which is a upgrade I think it might be possible. The only question is: "Will the firmware detect the Quad-core properly?" I will certainly wait until my warranty is expired, even if nobody have tried it, I certainly will. Of course I love to see anyone doing this, then I really know if it's compatible or not so I will have it clear for myself.