A mid-2007 imac would have a core2duo chip running at either 2.0 or 2.4 Ghz and supports up to 4 GB memory, although it may have shipped with as little as 1 GB. If you have only 1 GB of system memory, consider upgrading it to at at least 2 or even the full 4 GB because a single GB of memory would be limiting factor on an otherwise decent piece of hardware.
When it comes to distribution that would work on your system, pretty much anything would work. You would for certain want to pick a current release and if you do stick with 1 GB of memory, I'd probably avoid ubuntu's (or any other distro's) gnome desktop. An xfce, enlightenment, or any of the other lightweight desktop would work well though. I've even seen the fedora spin of KDE work well in one GB.
If you've used Linux before, pick a distribution you've liked. All your hardware should work. There is a firmware file for your isight cam that you may want to copy from your osx install, but some distributions may provide the file as a package. But your networking and bluetooth should work out of the box and there will be no problem detecting your drive, audio, or video. If you aren't sure which distro to pick, look at some screenshots or try out a few livecd's first because you get to try out a test run without doing the install.