Is it possible to record iMovie voice over with AirPods?

I couldn't do it in iMovie either (just as you show in your screenshots), but I have an idea.

Just record the audio using Quicktime Player.

Open Quicktime Player and select "New Audio Recording." Your Airpods should show up there as an audio source.

To time the audio with your video, start recording, then switch to iMovie. Hit play on the video timeline (ensure you have no sound playing) and talk along with the video.

Then take your resulting recording from Quicktime Player, pull it into iMovie, lay it on your timeline and sync it up. (Obviously you'll want to trim the ends off.)

(There are alternatives, such as using Soundflower to create patches from one audio source to another, but that seemed a lot more convoluted and complicated to go into.)

I found a way to trick iMovie into accepting my AirPods by creating a new Aggregate Device with the Audio Midi Setup Tool. First launch the Audio Midi Setup app, and click the + in the bottom left of the window. Select Create Aggregate Device

Next select your AirPods input device as the only device in the aggregate and name it something useful.

Finally, you'll be able to select your new Aggregate Device in the microphone selection dropdown in iMovie. Hope this helps somebody in my position in the future!