LED 1 indicates that trickle voltage from the power supply has been detected. This LED will be ON when the computer is turned off and your power supply is working correctly.
LED 2 indicates that the main logic board has detected proper power from the power supply when the computer is turned on. This LED will be ON when the computer is turned on and the power supply is working correctly.
LED 3 indicates that the computer and the LCD display are communicating. This LED will be ON when the computer is turned on and video signal is being generated.
LED 4 lights only if the computer detects an over-temperature condition. This LED will be OFF when the computer is turned on and running at the correct temperature.
Inspect the 24 capacitors for bulging and/or corrosion. There was also a GPU problem on this one. The solder joint failed as the machine heated up and this can sometimes be repaired with a solder reflow. Take a look and let us know what you find. The LED's indicate a bad GPU (video card). This machine also has integrated video. The first thing I would check is the RAM to see that they are a matched pair and seated properly: http://support.apple.com/kb/ht3246