iMac Intel Duo 20" Windows games
You really should get a second HD to run XP on alone. Unix and XP both want to be primary parbreastions. I don't know if the iMac has room for another HD in an iMac. If not, you will get pee poor performance from a USB or Firewire external drive.
This being said maybe you should think about building a PC and running OS X on it along with Windows. You can have it all in one case. There are guides that will tell you what kind of components are compatible with OS X and have full functionality. Some folk are running OS X on PCs and not having many problems. If you can get it to run well, you can put OS X on a cheaper PC that has a much faster processor than the Macs currently have. Here's a web site that has information on running OS X on a garden variety PC.
Why does boot camp exist
Again with these bizarre claims of extreme expense? Please stop it. The last one that got specific only...
Another good solution is to buy a PC. You can get a very fast Dual Core PC for 700 to 1000 bucks. This would have a 2.8Ghz or faster Dual Core CPU.
I expect the performance to be identical because Macs are actually PCs now. Same memory, graphics cards and HDs.