If you are doing this for fun then I would go hog wild here.
How about creating a case using one of the new 3D printers. Here in Boston you can get your CAD drawings turned into the object at a MakerBot Store now. Others also offer the service on still bigger 3D printers! You can do a bunch of different colors to boot! While I haven't looked you may even find someone has already created a case which you can adapt for your iMac logic board. You'll need to think about EMI shielding in any case.
The only issue would be making all of the needed measurements from your current case to translate over to the new case. I wouldn't alter the placement of the things internally.
I would look at a VESA mount setup so you could mount your new screen to the case (so the case is lined up like it is now) and then mount the iMac foot to the case or put a second VESA mount to mount it to a display stand off.
If the other hand you're trying to save some bucks then I think I would sell the system for parts and get a new one.
To be honest, I have an old MacBook with a dead display and I'm thinking on doing this my self. I have a theme of a Clam in my head right now. Can you see it, a large clam shell sitting on ones desk only to discover its a laptop when you crack it open!