I just read that it will have the NVidia 8800 and know that this card doesn't work with Avid.  Will this version of it work?

Generally, Apple's newest computers only work on the current version of the OS and won't work on earlier versions due to a lack of drivers for the new hardware.  It's unlikely that you'll be able to install Tiger (OSX 10.4.x) on a new machine and since Avid doesn't yet work with Leopard (OSX 10.5.x) the graphics card incompatibility is either the cause or the effect of the problem.  Once the OS and Avid are compatible the graphics card should work too.

If you get the 2.8GHz 24" with the ATI 2600 and are able to procure the original aluminum iMac installers, you could theoretically install that version of Tiger. You may need to image an install done through the original aluminum iMac, which is what I did with our Mac Pro (which also has an ATI 2600 XT). However, there isn't going to be an easy or reliable way (if there is a way at all) to get Tiger working with the NVIDIA card as there will be no Tiger install discs with drivers for that card. It may be doable if you really like dealing with kext files, but I wouldn't recommend it or say that it can be done. Plus, if the card doesn't work with Avid, there is no point to it anyway.