It looks like Apple may be planning to launch a 4K iMac alongside of its 5K model later this year, according to references found in the code for the OS X El Capitan beta. Apple doesn't currently sell a 4K Retina Display iMac, having jumped straight to 5K last year instead but such a product is referenced in the OS X El Capitan beta, which is currently with developers ahead of an official launch in October.
Since the 27-inch iMac sports the monstrous 5K resolution, it is possible that Apple is going to fit 4K on to a 21.5 inch iMac, although it will still need some fairly decent graphics horsepower to run such a resolution properly. We have heard that the 5K iMac does have some problems due to the lack of GPU power so maybe shrinking down to 4K will help alleviate that a bit.
Apple tends to have fairly good scaling options within OS X so having the fairly small 21.5 inch display usable at 4K should be achievable at the cost of some screen real-estate. Currently, Apple's 21.5 inch iMacs are all 1080p, while the higher end 27-inch ones come with a 1440p display, with the 5K model sitting at the very top of the chain.
It is not known if Apple will replace 1080p screens entirely in its line up but it is possible that the company wants to help push the industry on to higher resolutions and finally start to leave 1080p behind.
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KitGuru Says: This isn't the first time that future Apple products have been discovered by digging through OS beta code. Given that Apple has always pushed for higher resolution displays on its devices, it wouldn't be totally surprising if it decided to ditch 1080p panels on its iMacs in favour of 4K ones. Unfortunately, we won't know for sure until October when the new Mac line up is announced.