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Introduction
Here are detailed instructions showing how to turn your iMac 4,1 into an iMac 5,1. I'm filling in some gaps in [http://www.tekrevue.com/stayin-alive-upgrading-cpu-hard-drive-ram-2006-imac/|this procedure for upgrading a 2006 iMac].
I replaced the Core Duo T2600 CPU in my iMac4,1 with a Core 2 Duo T7600, which is the fastest replacement CPU for this iMac. I bought the replacement CPU on eBay for $25.89 from an overseas seller. The price was right but it took almost a month for the CPU to show up in my mailbox.
After replacing the CPU and updating the firmware, the resulting computer is equivalent to an iMac 5,1. It is now possible to install 4 GB of RAM, though the computer can only address 3 GB.
The best reason for upgrading the CPU is to be able to install MacOS X 10.7 Lion. This is surprisingly tricky to do.