I'm having the same problem, and it's been going on for months. I have an Intel CoreDuo that I purchased in October of 2006, and the System Profiler shows that it contains the Radeon X1600 graphics unit.
This defect sounds like it's affecting more than just one person---I'm glad I found this thread by running a Google search on the graphics adapter---and a $2+k piece of hardware should have a lifetime of greater than 2 years, so I hope Apple offers to fix these machines (without requiring Apple Care). I doubt I'll buy another Apple laptop to replace this one if not.
The crash that I'm experiencing also occurs at about 60C, with the same kinds of distortions as reported in the screenshots linked in this thread, and the distortions get roughly increasingly frequent and increasingly pervasive as the CPU heats up, ultimately leading to a crash. Once the system crashes, the mouse cursor is still responsive, but clicking or hitting the keyboard doesn't have any effect again. For a few seconds shortly after the crash, the cursor changes into the "busy/loading/whatever" spinning thingy, and then returns to normal (that is, the cursor returns to normal; the system is frozen and useless until I reboot it).
This is starting to make my computer completely useless.
I have yet to upgrade to 10.5.6, but from what I'm reading, I'm not optimistic. I will try upgrading later tonight (when it cools down in my apartment!)