pattern of dots around desk icons

I am having problems with my iMac G5. Around each icon on my desktop is a pattern of dots that extend about 1/2 inch all around each icon. When I play a quicktime movie or watch a DVD I get a pattern of dots that extends over the entire image. When I use the visualizer with iTunes I get a similar pattern extended across the colored image.

Other that than that, things look good. This machine has been to apple to have the PSU replaced in the past for overheating issues and shut down issues.

I would like to attempt fixing it myself since I am pretty handy and like to do things like this. Any thoughts on what it could be? The apple forums have been inconclusive for me in diagnosing this. Some say its the graphics chip, others that it might be the capacitors. I have seen capacitors sold on other sites, but do not see them here on iFixit.

Thanks for any help.

Pat