IMac or Mac Pro for iPhoto albums and home movie editing?

I have a Mac Pro OS X 10.6.8 with iPhoto 7.1.5. This system is now obsolete for ordering iPhoto albums. I need to upgrade to iPhoto 9.5.1 to buy a Mac produced photo album. To upgrade iPhoto I need to buy a new Mac as my 2004 Mac Pro with 2008 Snow Leopard can't be upgraded. I will use the new Mac for email, web surfing, iPhoto, and weekend video editing. I use Final Cut Express on my current Mac Pro. I will also need to transfer videos and about 20,000 photos from my current Mac to a new one.
So, here's the question: For my needs (listed above) which is better,
(1) iMac 27" or (2) new Mac Pro? Then, with the one chosen, how should it be configured to do my basic video editing? I have 100 hours of family video on Hi8 and VCR tapes and will edit these on Final Cut and burn them to DVD's. (I understand both iMac or Mac Pro now require an external DVD set-up.) So, which computer and how should it be configured. Looking to pay between $2500-$3500. Thanks for your help!

What video formats are you talking about? DV, HDV, etc?
Mac Pro is a better solution, regardless. Here's why: Simply upgrading an iMac HD is not enough. You do not want to capture your video to the boot drive. It's too much to ask the drive to manage the OS, your editing software, AND your media. This scenario might work - but is certainly prone to dropping frames. Ideally, you want one drive for OS + editing software & a separate drive to capture media to.
Now, since you can only have a single HD in the iMac, you're demoted to using external capture drives. So let's say you get yourself a FW800 drive for capture and then hook up your camera/deck to an available FW400 port. You'd think you're safe - and again, you may be. But the problem now is that the iMac has ONE and only ONE FireWire bus. So in theory these 2 devices: HD & Camera are battling for the same bandwidth. So you've still got a bottleneck happening.
So DV only would probably work. But it may have issues that the expandability of the Mac Pro can conquer. Hope this helps.

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