If i plug an external display to an iMac, can i use it as the primary display, and use the iMacs one as a extension? Or is it possible just the other way around.
Yes you can. All this is accomplished through the display settings. To set a default primary monitor open Preferences>display>arrangements and drag the little white bar to which ever monitor you wish to have as the default.
Yes, you can but it is important to note that there is no way to turn off the iMac's display while using the external monitor. With a MB or MBP this can be accomplished by tricking the internal display into turning off by closing the case.