There is no real work to do other than properly taking it apart and putting it back together. The core2duo chips plug right in. You do have to re-glue the heat sink from what I remember. Not a big deal, you just need to get the correct tools / heatsink paste before starting the project.
Do a search for iMac disassembly on google, or here on mac rumors or even on anandtech for step by step instructions.
If your going to open it up, re-think the hard drive and the Wireless card. You can use the wireless "N" card for the Mac Pro, and you might as well upgrade the hard drive while your in there.
One negative affect of Apple on Intel, is that the mobile chip prices haven't budged all that much since their introduction. I'm still waiting for a moderately priced core2 chip to replace mine.
Some of the Authorized repair centers will do some of these upgrades for you, of course they are going to charge you, but you will keep your warranty from what I understand.