I wonder if it's really worth paying more to get an SSD with less room
I was an early adopter of the Fusion Drive, back when the 1TB version was better too. There are things I liked about it, and things that I hated about it. In retrospect, I wish I would have gone with just an SSD.
There are some other factors besides just speed versus size. The Fusion Drive has moving parts, generates more heat, and I have read that if you use Boot Camp with a Fusion Drive, the Windows partition is on the HDD part of the Fusion Drive.
is it the difference between a Fusion Drive and an SSD really that tangible
I liked the 1TB Fusion Drive at first, and everything seemed just as fast to load as an SSD. But, I really noticed the difference between the SSD and Fusion when playing WoW.
If I played often, the game loaded really fast. If I took a break from it for a few weeks, and when I started playing again, it loaded very slow for like a week, and then fast again. It was kind of annoying.
Then there was the issue of the Fusion Drive breaking, but Apple refused to fix it. I kept having issues on my iMac that had the symptoms of a drive issue. It would eventually corrupt the system files so I couldn't boot. I would take it to the Apple Store only to have my Fusion Drive pass their HW diagnostic test, they would wipe my drive and re-install the OS. I would restore from my back ups only to have the issue come back every few months, then weeks, then days after a visit at the Apple Store.
Eventually, the drive fully broke and the recovery system wouldn't even work. It took a few hours at the Apple Store to get the HW Diagnostic test to work, and it finally failed after many times passing. They finally replaced the drive.
If it was just an SSD, typically they just fail completely and go dark. HDDs have the habit of dying slowly and don't always show as bad in HD diagnostic tests.
So, I kind of wished I would have just gotten the SSD, and avoided this mess. Besides, you can always use external storage.
I am pretty sure you meant Late 2012 iMac