My PowerMac G5 Dual 2.0 also has this problem.
It all started one sad afternoon a month or so ago. I noticed that my computer was on and the fans were on full speed. As soon as I moved the mouse to shut it down, I got the wheel of death!
I had no choice but to do a force shutdown.
The next day, I turn my computer on and it just stayed on the gray screen with the dark gray apple, and no spinning thingy.
So once again, I had to force shutdown.
Pressing the 'Option' key did gave me the screen where one can select where to boot from; the main HD, booting CD, etc. but none of the worked.
When I chose to boot from my internal HD or from the restore CD it would just get stuck on the gray screen with the apple logo.
I pressed the PMU button = no change
I did a PRAM reset = it brought my G5 to life but then a few minutes later it froze and history repeated itself.
Did a PRAM reset again and this time didn't work.
Tried booting from my PowerBook G4 HD via firewire = frozen gray screen
When I pressed the 'T', i get the FireWire logo and I'm able to boot my G5's HD using my PowerBook G4. But when I put my G4 on firewire mode and try to boot my G5 by selecting the OS of the G4, I still get the frozen screen, so the problem is not with the HD.
One time I was able to boot my G5 from the 'Restoration CD' and I used the Utilities to Fix permisions, and repair the HD but still the computer would freeze and same old story.
Since I got this problem, It has work normal only 3 occasions but no longer than an hour until the fans go crazy and freezes.
I tried different memory sticks and no improvement.
My AppleCare expired on May, and my G5 went down 2 or 3 months after that.
This feels part of an strategy called "Get a(nother) Mac". Where comps are design to last just a little after AppleCare expires and then BOOM! no choice but to spend some serious cash on fixing it or use that money plus more to get one of the resent mac which have had some changes since one bought the mac that just went to apple heaven.
Anyways, I feel that the problem will be solved by replacing the two processors, heatsinks, or whatever they called it.
I took apart my G5 today and I'm not sure but it seems that the heatsinks might use some kind of gas to cools the CPUs or Chips and I think that gas is over.
Has anyone swap the heatsink units and noticed any difference?
Here's of the heatsink for the PPC G5 2.0
http://img186.imageshack.us/img186/2642/g5heatsinksw5.jpg