Major graphics problems, 7300 GT

Hello.
I have a white 24" iMac with the Intel Core 2 Duo and the 7300 GT graphics card. Upgraded to Leopard and 3 GB RAM.
About a year ago I started experiencing graphical problems while doing things that involved a lot of GPU activity, like playing a 3D game in Windows. Textures would become discolored and corrupted to the point of not being able to play the game. After letting the computer sit for a while it seemed the issues would be alleviated, but the same symptoms would recur after running the game for a while.
I eventually began to notice similar issues occur during much less demanding usage in OS X. Graphical glitches would appear on the desktop and in active windows. When the glitches got especially severe the display would freeze and the system would have to be rebooted to be usable again.
This seemed like a heat related issue, to me. I took the computer apart and cleaned the dust out all of the ducts and fans, but it didn't seem to help at all. I installed an application called smcFanControl, which allowed me to force the fans to run at a faster speed. While running faster, the glitches stopped occurring and the system would no longer freeze.
Things were okay this way for several months, but now, even with smcFanControl set to run the fans as fast as they can go, the glitches are beginning to occur again. Entire windows become discolored with a cyan hue, and random artifacts show up in random places on the display.
Here are some shots to demonstrate what is happening:
http://horseface.org/iMac/1.png
http://horseface.org/iMac/2.png
http://horseface.org/iMac/3.png
iStat pro doesn't indicate anything shocking as far as temperatures go. During all of this glitchy madness, here's what it's showing:
http://horseface.org/iMac/temp.png
Note that the fan speeds are way high, but, again, that's because I'm forcibly raising them with smcFanControl. Interestingly, though, even when I'm not running smcFanControl, the temperatures seem to hover in a safe area. In spite of this, I'm almost certain it's a heat related issue. When I first installed smcFanControl and increased the speed of the fans, the iMac went from freezing and glitching on a daily basis to totally normal operation. There also appears to be a direct correlation between intensive usage and the glitching/freezing issue.
I have already installed all of the seemingly relevant OS X updates that I can find along with all of the other suggested updates. Nothing has helped, aside from smcFanControl.
So, my question is, what can I do about this? My computer is no longer under warranty. I'd rather not have to take it to Apple and have them charge me for the initial consultation and then whatever hardware replacement is required along with the cost of out-of-warranty service. I have already opened and disassembled this computer while trying to clean it. While it was a very daunting task the first time around (I really wish this iMac were as nicely designed internally as the first G5 iMacs!), I'm comfortable enough to go ahead and do it again, if necessary.
My educated guess here is that there is something wrong with the video card. Perhaps the onboard temperature sensor is bad, and that's why it's reporting safe operating temperatures but is behaving as if it were overheating? I'm not really sure.
Would it be wise to try to replace the video card? This seems to be the obvious next step to me, but, unfortunately, the prices I'm finding for the replacement parts are pretty outrageous. ApplePalace.com lists the 7300 as $188 and the 7600 $231. Is there anywhere I can get a replacement for less? Is this even likely to fix the problem? I really don't want to make such an investment and have it turn out that it's not going to help.
I don't know what to do. Any ideas or advice would be greatly appreciated. Thanks in advance.

Have you tried running Apple Hardware Test?
Your guess is most likely correct of it being the graphics card. I have a friend with the exact same computer same problem. It's not an over heating issue. A component is supposed to operate within certain values and certain temperature ranges. If a part has gone bad or is going bad it may not be able to produce those values at the temperature required. Maybe it can still operate within spec at a lower temperature. Even though temperature appears to be the indicator this does not actually mean the device is over heating rather the part is failing.
I have only been able to find one website that you can purchase the replacement graphics cards for this particular iMac and yes it's a bit pricey. My friend was quoted by the Mac Guys for about $250 including installation for the 7600GT card. Replacing the graphics card is really your only option unless you want to junk it and buy a new machine.
http://www.welovemacs.com/apim242inco25.html
George

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