When I switched on the power on my peg today, the power and HDD-LEDs started flashing rapidly in an endless loop (incl the LEDs on the keyboard). What the h*** is going on? Anyone experienced similar problem?

Never seen such - have you checked/tried to move the cables and connectors?

Don't worry, this looks like power shortage.

1. Try to disconnect power supply from all peripherials except motherboard. If this helps, check if you used really short screws to mount your drives. Once i repaired a PC where such a screw was long enough to touch floppy drive's board and short it to ground. After removing it everything went well.
2. Disconnect your PSU at all, look at http://www.ts-consulting.net/ATXPS.HTM and carefully short pins "PS ON#" and "COM" (any of them). If your power supply is OK it will start up (look at fan to determine whether it works, fan should roll at _STABLE_ speed, if it does not, replace your PSU).
3. Check that there are no screws fell out of something and lay on the board and between board and case.

I hope this will help you to find the source of the problem.

Thanks, man! I'll check it out.