@ ppc-grinch - Those photos you posted seem to indicate it is something, more likely, to do with the GFX chip, or GFX part of the system, rather than OS related

Have you opened the iMac up and checked the state of the connections of the video lead from the logicboard to the monitor, and that there is no apparent damage to any part of the video cable. Ideally checking each connector and wire for continuity?

The video cables do fail on some systems, from time to time!

I have personally not come across a similar problem with the 4 x 20" iSight G5 iMacs that I have owned, but one of my Powerbooks developed a more similar GFX corruption/distortion when its GFX chip failed, not that I want it to be that, but it is obviously a possibility.

I have had at least 3 of my A1145 20" G5 iMacs fail, and it was usually due to a logic board failure, usually related to the capacitors, which was a well known problem on the earlier G5 iMac models such as the A1076, but it is also a problem with the 20" iSight model. I managed to repair my 3rd iSight iMac after replacing/resoldering new capacitors, but it had not exhibited similar behaviour before I ended up opening my iMac to find that 3 of the capacitors had "given-out" (blown) on the back of the logicboard.

My iMac was failing to boot, or read the HDD, which it ended up corrupting the data on, but not damaging electronically the HDD, so I managed to recover some data, and then re-format it. It would still boot with the MorphOSBoot CD, but not install the OS.

I am only mentioning this now in case another user encounters a similar iMac problem!

I hope you manage to find, and fix, the problem. With the 20" iSight model there are some common interchangeable parts in the A1207 (Intel), and same era, models, so there may be some in a 17" (Intel) model(s) if you check those 17" models via EveryMac (17" Intel era 2006-2007), or other similar resources online, in case you need parts, that might be, otherwise, very hard to acquire.