Can I replace my optical drive with an SSD

Here's the article you're looking for: Installing iMac Intel 20" EMC 2266 Dual Drive

Additionally, I would suggest setting the SSD as your main SATA connection and the HDD connect via your optical drive connection, that way it will try to boot from the SSD Sata first rather than where the optical drive used to be. I wouldn't say there are "issues" with it, it just means that every time you boot the computer you'll have to hold down the option key or wait for the computer to try several sources to find the optical drive OS, when you could just have it in the hard drive slot and keep the HDD in the optical drive. Hopefully that made sense.

tldr: SSD in hard drive bay, HDD in optical drive bay. Use carbon copy cloner or something along those lines and test the clone on the SSD before you wipe the HDD.

You want a 2.5" SSD, with a SATA 3 connection, and that article at the top under "relevant parts" also has the link to an enclosure you'll need.

This is a relatively difficult repair just because of that display, but once you're past that it's the same as any mac. Let me know if there's anything that needs cleared up!