What OS are you using? If you end up putting a solid-state drive in your iMac, I would update the existing internal drive’s OS to High Sierra. That is, if the internal drive can take it.
As for SSD vs HDD, I would not put an HDD back into your iMac. It would run so much better with a solid-state drive, even with it running externally on the slow USB. Like I said earlier, if you got a FW800 enclosure and put a solid-state drive in it, this would be a pretty decent alternative to doing the internal swap.
If your partner is able to swap the drives, thinking do so cheaply, that might be the way to go. The iFixit guide is extremely helpful, especially for your first time.
But, if you’re considering a new Mac, 12 years is a decent run on any computer. Maybe it is time for a new Mac.
If you do decide to go with the swap, you can do so pretty cheaply by buying the parts individually compared to getting a kit. Or, getting a partial kit, something that includes the tools and temperature sensor cable, then get the solid-state drive and bracket separate.
If your partner already has simple computer tools and some suction cups for the glass, you really just need a drive, external sensor, and a bracket if you choose to use one. Some people don’t even bother using a bracket if they’re using a solid-state drive.
The swap is not hard at all, of course hard and easy are relative terms. The first time I did it I might’ve taken me an hour and a half, on a similar model. Now, I’m able to swap the drive and maybe 5 to 10 minutes, tops.
I opted for a really great deal on Amazon for a new base level Mini ($593 including tax).
There are rumors about a new Mac Mini coming out, but they are just rumors, and there’s a good chance that Apple will continue selling the M1 Mac mini at the current price, and the new Mac mini might be listed at a higher price.
If you need something right away, the M1 Mac Mini would be a good way to go. The M1 would be a huge upgrade to your 12 year old iMac.
Remember that you will need a monitor.
I have the entire hard drive backed up on an external drive. Can I boot from that?
It totally depends on if it is a bootable back up. Was it made with a software like carbon copy cloner?
Or is this like a Time Machine backup? If it’s time machine it will not be able to boot, but you can restore from time machine. This means you can install a fresh update on a new drive, and then use your time machine back up to migrate all the data to the fresh install.