"Newbie question can i do a usb stick boot drive? How would i do that? Where do i download the files?"
Yes, you can boot from a USB flashdrive (slow) or a USB external drive (a little faster).
I'd suggest buying a small 2.5" SSD (250 or 500gb), and putting it into an enclosure like this:
SABRENT 2.5 Inch SATA to USB 3.0 Tool Free External Hard Drive Enclosure [Optimized for SSD, Support UASP SATA III] Black (EC-UASP)
tinyurl.com
You can use it as the boot drive for the iMac you have now, and when you get a new Mac, it will be easy to unplug it and "re-purpose" it for the new Mac.
The 2007 iMac shipped with 10.4.10, and the last OS (I think) it can run is 10.11 (El Capitan).
Do you have access to another Mac?
This will make downloading the files and building an external bootable drive much easier.
If you absolutely do not have a way to prepare the drive on another Mac, you MIGHT be able to go on ebay and buy a pre-configured USB flashdrive with a copy of the El Cap installer pre-installed on it. Just "boot and go". These sell for about $20.
You could then get booted, and try to revive the internal drive.
If that failed, you could connect an external drive (such as the one I mentioned above), initialize (erase) it (use Mac OS extended with journaling enabled, GUID partition format), and then install a copy of El Cap onto it.
Then you ought to be able to get booted and running from the external SSD...