I inherited an old iMac (A1224) mid-2007 20" Core Duo 2 2.0GHz, with the rock-bottom specs for this model.
I first bumped the RAM from 1GB to 4GB for $20.
Next, I bought a X7900 (pulled from a A1225 iMac) on eBay for $59 and replaced my T7300 CPU, using the iFixit guide. (It took about 2 hours.)
My Geekbench 3 (64-bit) score went from 2135 (T7300) to 2916 (X7900). While running Geekbench, the CPU temp went from 30 C up to 48 C (iStat menu). So I get about a 37% increase with the X7900 over the T7300, which is pretty much consistent with the Geekbench numbers reported on the Everymac website.
I'm currently running OS X 10.8.5 on this iMac, with Office for Mac 2008 installed. Both Word and Excel run noticeably faster with the X7900.
After a couple of days usage, I've experienced no problems with the upgraded iMac so far.