Can't boot off of USB on Early 2006 iMac and can't get to Startup Manager
Yosemite is not supported on the Early 2006 iMac - it can only go up to Snow Leopard v10.6. You will either need to order a set of restore discs for this particular system (as discs do not necessarily work between models, make sure to get the right ones) or find a retail copy of either Tiger (Make sure it is newer than 10.4.6), Leopard or Snow Leopard.

You can find retail copies of the discs on eBay or other various sites. There is a remote chance that you may be able to order the recovery media through Apple's phone support - we used to do it when I worked for Applecare - but due to the age it is less likely that they would have it and/or would have shipping times under 2wks.

It is highly recommended that you opt right for the Snow Leopard retail DVD as there is no upgrade path from Tiger -> Snow Leopard for free.

EDIT: To answer your questions in order:


The operating system you made the drive from is not supported on your computer by a few generations, likely causing the issue. Booting from USB is supported on your machine
There is no operating system, recovery system, really anything to support booting into from your disk selector
No, not directly. The closest you would get would be Single user mode, which is just an extension of the operating system itself. Through there, you could use diskutil to see if the drive was recognized. Again, this would require the OS already be installed.
Yes, and it won't be known until you have it in your hands. Be careful about the disks you get, and if in doubt, buy the retail edition.