Unfortunately only Intel Macs can boot from USB. Yes you can format a flash drive using any of your Mac OS's. I've done it many times in 9 and 10 mainly with free generic ones my wife picks up for me at seminars she attends for work. They hand out 512MB and 1GB ones like they used to hand out keychains and other junk. It would make a good backup device although USB 1.1 on your iMac would make for very slow transfer rates. A better option would be a firewire pocket drive or full size external drive. $75 to $85 at OWC.
