I helped a friend upgrade the same model iMac several months ago from Tiger 10.4 to Snow Leopard and we also replaced the RAM to 4GB, it runs well. You should also seriously consider replacing your RAM with two 2GB sticks for a total of 4GB (although it's really more like 3GB for your model, but you need matched sticks). You can use the link in Drew017's post to purchase Snow Leopard OS X 10.6 directly from Apple's web site. If so, you could technically run Lion but you would also be better off with Snow Leopard like the OP. Please also note that OS X Lion and OS X Mountain Lion are not capable of running Mac OS X apps originally written for the PowerPC processor as neither supports the 'Rosetta' environment. It is not supported booting into 64-bit mode when running Mac OS X 10.6 'Snow Leopard.' It does not support 'OpenCL' either. *This system can run the latest version of OS X 10.8 'Mountain Lion' if upgraded to at least 2 GB of RAM. This model cannot run versions of OS X newer than 10.7.x 'Lion.' Please also note that OS X Lion is not capable of running Mac OS X apps originally written for the PowerPC processor as it does not support the 'Rosetta' environment. Although it has a 64-bit processor, it has a 32-bit EFI and is not capable of booting into 64-bit mode. *This system can run the last version of OS X 10.7 'Lion' if upgraded to at least 2 GB of RAM. That depends on if you have the 17 or 20 inch model.

Kodi for mac 10.4.11