Transferring the water plus the filter is absolutely fine, even recommended. Your a lucky so and so getting a 4ft tank for free. Boy oh boy its lucky. Is the 1ft relating to its width, if so your pretty limited to what you can keep as 12" isnt really an awefull lot, and you certainly won't be able to keep any bigger cichlids in there. You could have dwarfs in there though, possibly going up to something like firemouths. Or maybe you'd like a tank of shoalers so a large shoal of tetras of sorts would look good. It depends on what decor you plan on keeping also. Do you want it planted, or rocky, maybe a nice tangled mass of wood or perhaps you'd like it bare (who knows).
If it were me i'd get an overpowerfull filter that will create lots of current and i'd go with a shoal/group of 10+ Garra Flavatra. Its something thats been on my mind for a while now, so that would be my plan. But it depends entirely on what takes your fancy.