It would be possible. As for speed, I have no direct comparison to an iMac and the default hard drive inside but I remember doing this with an older Mac Pro and the external ssd over FireWire was minimally quicker then the internal 10,000rpm drive in the Mac Pro.
So assuming your drive is a 5400 rpm, it's going to be a bit quicker but I can't see it's going to feel like a proper internal ssd in terms of speeds. (would love to be proved wrong however)