Since this big kicker that merom needs is the new chipset, which is available or will be very soon, it might be possible to see an iMac update to this in time for the 10.5 release. However, it isn't a guarantee. Regardless, the current model will run 10.5 without any hesitation at all. Would Apple really release something like this that
couldn't be run on it's current machines? It will most likely be slower on a G3, but nothing far from terrible.
A late spring update might hold more weight, as the specs for SR will be out, but I don't see Apple actually using the entire platform as released from Intel either. They will most likely, in my best guess, use the specs and for lack of a better term "think different" with something better.
When you have the cash, get one. It will be fine for years to come, or you can always resell and upgrade if you prefer. Going that route, and given Apple's nice resell value, the cost of upgrading is much less overall. You can pay a few hundred a year, or $1500 (or more) every 3 or 4 without reselling the old one. Just depends on how you approach it.
Overall, you would be able to run the next few versions of the OS as well on the same machine. Just look at people that are running 10.3, and 10.4 on G3's still. Granted it will perform better on the latest and greatest, but it is far from unusable.
In terms you might be more familiar with, XP runs ok on a PIII 733 w/ 512MB of RAM, but it would obviously run better on the newest machines. Although who would actually want to run windows at all still confuses me, unless they have absolutely no choice (like because of job, etc.)
But hey, somebody'd going to run it, I'm just glad it isn't me.