Yosemite video problems and crashing on Mid-2010 27-inch iMac

Question

I have an iMac (27-inch, Mid 2010) running a 2.93 GHz Intel Core i7 processor with 12 GB 1333 MHz DDR3 RAM, 2 TB hard drive and the ATI Radeon HD 5750 graphics with 1024 MB VRAM. Ever since upgrading to Yosemite v. 10.10.1 I've been experiencing extreme instability with frequent full lockups requiring hard power offs and video pixelation issues with radom 1/8" green and purple squares flashing randomly on the screen. I've reinstalled Mavericks on an external drive and when booted from it experience no issues at all. So the problem is not hardware, it's a problem with the Yosemite OS. When is Apple going to address this issue and come out with an update to Yosemite to fix these problems? My iMac is almost useless now.

Answer 1

Try a restart.
Do a backup, using either Time Machine or a cloning program, to ensure files/data can be recovered. Two backups are better than one.
Try setting up another admin user account to see if the same problem continues. If Back-to-My Mac is selected in System Preferences, the Guest account will not work. The intent is to see if it is specific to one account or a system wide problem. This account can be deleted later.
Isolating an issue by using another user account
Try booting into the Safe Mode using your normal account.  Disconnect all peripherals except those needed for the test. Shut down the computer and then power it back up after waiting 10 seconds. Immediately after hearing the startup chime, hold down the shift key and continue to hold it until the gray Apple icon and a progress bar appear and again when you log in. The boot up is significantly slower than normal. This will reset some caches, forces a directory check, and disables all startup and login items, among other things. When you reboot normally, the initial reboot may be slower than normal. If the system operates normally, there may be 3rd party applications which are causing a problem. Try deleting/disabling the third party applications after a restart by using the application un-installer. For each disable/delete, you will need to restart if you don’t do them all at once.
Safe Mode - Mavericks   also Yosemite
Safe Mode - About