I was literally thinking this and looking into a couple months back. I have a late 2019 iMac 5K retina top spec (purchased for £4200 literally 2 months before they announced the M1 chips) and now I own an M2 MacBook Air 15” 24gb, and was looking into using my iMac as a display… but no! Apple won’t allow it unless as you said, it’s a 2009-2010 iMac. Insane that we can’t do it with more recent iMacs isn’t it… seems like such a waste

You are not the only one my friend. I have the same issue and want to use it as a secondary monitor. It is a shame because the color and retina display is still great and would be awesome to use as a grading monitor, external monitor, etc.

It might be possible to install linux on the imac, and set it up to act as a monitor. I'm not sure what forum to ask about this in. I like your idea about a specific app to do this; if there's room to install an appropriate Xcode for the level of the OS you already have somebody might be willing to write a free-ware or share-ware app and make the source code available. Apple exerts a lot of control over what can be sold on their app store and might not allow apps for OS's they no longer support.

Solution: stop buying apple products. On windows, if you have a problem, someone has created a solution and windows doesn't limit you in any way.

Apple is one of the grimyest companies out there.