Functionality, I think it makes no difference to make an iMac that is 1inch thick or 1.5 inch thick. But because this is Apple and they want to wow customers inside Apple retail stores, they will aim to make it 1 inch thick.If they want to make the iMac as thick as an Xdr monitor and use those drilled circles as cooling vents then I guess keeping system power down would be an input.
edit - apparently the xdr uses about 100w in full brightness hdr mode. I don’t have a good sense how much power the 5k panel in the current iMac draws (50w?) so could be scope to up the core count on the m1 chip and still fit within the thermal envelope of the xdr chasssis/cooling system
Still, I think Apple can comfortably fit a 50 - 100w chip inside a 1inch thick chassis. After all, the Macbook Pro 16" with its GPU and 8-core Intel CPU can draw that much power at its peak with a much smaller chassis.