The underneath video has 8 parts, you have to search for it to see the whole process... it seems to be the cheapest and most durable fix ;)
As to the root of the Problem:
I did some research myself and found that most display problems are in fact gpu, or better gpu solder problems. The GPU is only cooled by a heat sink, apple's official idea was, that the cpu cooler would pull the hot air also off the heatsink, what doesn't work at all. Just hold your hand left above the apple sign after you used it for a while and you'll see what I mean. Because this heat, the logic board deforms very minimal but enough to brake the soldering... you see very similar problems in notebooks and game consoles.
So if you're at a point where you would through away your iMac anyway, you'd might give this a try and maybe end up with a useable computer again ;)
Part1:
http://www.youtube.com/watch?v=Ok2uJZSQDD4
Part6:
http://www.youtube.com/watch?v=nqAg4c9SfG8