I am a video editor and I have seen 2-display video setups a where one monitor is used for the editing software, and the secondary monitor is used to preview the edited footage. How would I be able to set this up on an iMac, if at all possible?
The operating system supports multi screens. For the iMac i would say that a DisplayLink adapter would allow you to connect additional screens via USB. I've never used it, so I have no idea what the maximum resolution is, but I read several times on different boards that this solution has been successfully used.
Update: As gabesubdo mentioned in a comment below, it is not necessary to use a DisplayLink if your iMac has one or more Thunderbolt ports, which can be used as Mini Displayports as well. Apple provides adapters for Mini Displayports (to HDMI, VGA, ...)