Welcome to the Apple discussions.
That looks like a video circuit issue. However, first, does the screen change if you move the cover? If yes, the cable to the screen has a problem. Otherwise, If you have the OS X CDs that came with the system, or one of the TechTool products, you can test it. If you have the OS X CDs, find the one that, in small print, says 'AHT Version x.x' on it. Insert it, and reboot holding the option key down. Choose the Apple hardware test, click the arrow pointing to the right, and follow directions. Does that give you any additional information?
If it is confirmed as a video circuit issue, the solution is to replace the logic board, as the video is integrated on the logic board.