How to reformat the latest iMac?
Some short tidbits, followed with analysis:


You don't need to pay for the OS on a Mac that shipped with Lion or Mountain Lion.
Recovery HD ships with all the above Macs, but it's not visible in Disk Utility and could also be deleted, corrupted, or suffer a hardware failure.
Internet Recovery will let you re-download a recovery image from Apple's servers even if there is no hard drive connected in your iMac.
Booting from an external drive with OS X or a Recovery HD or a netboot drive (of which Internet Recovery is one free option) will allow you to totally wipe the entire drive in a Mac.
Most people are fine using Recovery HD to wipe their Macs as it erases the entire Macintosh HD portion and lest you start cleanly without needing to touch the Recovery HD.




Rather than boot to Command-R, I would boot to the startup chooser (just hold the option key) which should paint a grey screen with both the Macintosh HD and the Recovery HD - letting you choose the second. From there, if you have a fast internet connection (or don't mind waiting), you can use Disk Utility to zero the drive and then reinstall the OS that shipped with your iMac.