MacBook Stuck on Gray Screen

I've been experiencing a major problem today -- very major as my MacBook won't start up properly. Long story short: today I downloaded iTunes 8 and began to run through the paces to use Genius (scan my computer, etc.). My computer was sluggish in responding and gave me the spinning rainbow wheel, so I left it and went to work. When I got home ten hours later, the rainbow wheel was still going and I was unable to force quit iTunes. So, I did a hard power off (pressing the power button). Sadness ensued.
My Mac will not start up past the chime and solid gray screen. The most exciting graphic I've gotten is that flashing question mark folder on the gray screen. Thus far, after reading up on these forums and around the internet, I have:
Tried to start up from my Leopard upgrade disc (no luck; solid gray screen)
Tried to start up from my original OS 10.4.9 disc (no luck; solid gray screen)
Tried to re-set my RAM (take them out, put them back in) and then restart my computer (no luck; solid gray screen)
Attempted a PRAM reset (no luck; solid gray screen)
Attempted a safe mode start (my computer DID chime twice -- then solid gray screen)
After all of the above, with absolutely no luck, I'm at wits end. Leaving it be gives me that flashing folder after 5 or 10 minutes, then my computer automatically shuts down. The only strange thing to happen to my computer lately has been the above mentioned iTunes 8 challenges. My computer sits on my desk plugged into my external hard drive all of the time -- it never leaves my apartment and is taken care of with kid gloves. All I can think of right now is thank goodness for Time Machine and my external HD...
Now here's the truly sad part: my computer is 14 months old, out of warranty. As a guy who's had a Mac laptop since 2001 (Titanium PowerBook, then MacBook) after having Apple/Mac desktop after desktop (IIc+ anyone?) I've never had a problem like this and am my wit's end. The nearest Apple store is over an hour away from me (and I work long hours during the week) and there are no authorized repair shops within a 45 minute drive (again--the working during the day thing gets me here) I don't know what to do.
Anyone have any ideas? Or is my precious Mac dead?

I've read through everyone's response and the situation you guys described happened exactly to me!! My macbook is just over a year old so no warranty for me either.
Long story short, I was upgrading my Itunes and decided to install this "genius" bar (pun intended, not so genius afterall). Genius was taking forever and it seemed like my macbook had froze as it wasn't responding. So, I shut it down and started it back up. It didn't start to OSX, instead I got the flashing folder with the question mark on it.
I've tried multiple "fixes" (including DiskWarrior, resetting the PRAM, restarting with the Leopard DVD, and lastly, even smacking the drive to see if I can "unstick" the head of the HDD) but none of them worked.
So, I had to go out and get a new HDD. I'm reinstalling OSX as we speak.
I wonder if Apple will look at this situation and perhaps provide us with some compensation for this. It seems to be more than a coincidence that this scenario has happened to more than a few of us (not even including the people that are only reading this and hoping for a resolution).

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