imac and hm700
 

anybody know if a imac duo core 1 2ghz 2gb ram will process the 35mbps 720 or 1080 smoothly in final cut pro 6? Would I get dropped frames because of low ram or low speed?

The processing will be fine (rendering, output, etc.) but you will likely drop frames here and there while playing back 35mbps at the full framerate/dimensions, which isn't a big deal while offlining.
You can turn on dynamic playback for frame rate or pixel dimensions (or both) to compensate for any bottlenecks in your system.

currently I get dropped frames on the canvas in my final cut pro two-up arrangement when I use 1080p 19mbps.