Checker-board overlay on photos

Hi. When using iPhoto, or even Preview, to look at photos, I get a grayscale rectangular checkerboard pattern over the images. When enlarging or cropping the images, the greyscale bars turn green or pink. This began only this week. All photos are affected, old and new, iPhone or other camera.
The display settings have not been changed from their factory default settings (millions of colors, etc.)
It does not affect thumbnails or the desktop wallpaper, or even images on webpages. Although, the pink rectangle pattern does appear in the iPhoto thumbnail event title reflection.

Any thoughts?