Grid pattern around desktop icons and pointer?

I'm starting to get a square pattern of short lines, about an inch square, around all the icons on the desktop, in the dock, and the arrow pointer. Windows all appear OK, as is the background where there are no icons or folders, so it seems to be an OS problem. Any ideas?
Thanks in advance.

Apples Support has confirmed that I actually have a failed Video RAM chip. It's being fixed today under my AppleCare contract. Ther is another thread about this I posted in the iMac G5 display forum for those with a similar problem, including a screenshot from another user.
Thanks to anyone who read this and tried to come up with a solution.

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