I use a mini DVI to HDMI adapter on my wife's macbook. You should be able to do the same on the iMac. You just won't be able to carry sound over that connection, but some RCA cables will take care of that (mic to red & white). It worked fine for streaming netflix and such.
If Apple would put HDMI in on the imac, I'd definitely be plunking down some cash. My exercise bike and general workout stuff is in the office of my house, so it'd be nice to be able to play XBox or Wii Fit in the office instead of the living room. As of right now, I have to have an add'l TV in there.
edit: looking at Apple's site, it sounds as if you can input through the Mini DisplayPort. Would this allow me to hook a PS3 or Xbox into the imac?
Not without a special adaptor box, and its more like a digital conversion box for an old TV than just a HDMI adaptor, because of the way the iMac accepts inputs through mini displayport.
Thats why I was curious as to if I could even use HDMI output from it