It seems to me that you may have a defective temperature sensor in your machine. LED 4 indicates that the iMac is detecting over temperature conditions, which are caused by dusty vents (ruled that out) or defective temperature sensors. During normal operation, LED #1 #2 and #3 should be on, and LED #4 off. You will want to go through the iMac and make sure that all the temperature sensors are properly connected and are not damaged. If the problem persists, then you will need to get a set of replacement temperature sensors. You can usually find sets on eBay or amazon for pretty cheap.
Hope this Helps