having experienced this - and observed the process - (I'm not expert - but have used macs since the mid 90;s) - It seems to be a 'heat' issue. My brand new mid 2011 imac was the 'hottest' computer I'd ever owned. I would wake up in the morning, and go into my living room and wonder why it was so warm. (bearing in mind I live in London, UK).
First of all the hard drive failed after about 6 months, and I just thought - 'these things happen'. Though I was still concerned about the heat it was pumping out - but still just thought it was how 'new' Imacs were.
Then occasionally the imac would randomly put it the 'screen' to sleep. (not the whole system, as processes were still happening in the background and I could hear the drives running.) This became more frequent - and was the initial reason I contacted apple again (11 days out of warranty) to get it fixed.
I hadn't even noticed the discolouration of the screen until I was waiting in the apple store in Brent Cross (under it's bright fluorescent light) waiting to speak to them about why I'd contacted them. The 'smudging' was mainly contained to the upper left quarter of my 27" screen - but also seemed to have 'spread' down most of the left hand side of the screen, too. Apple called this 'contamination' (and made me feel as though it was 'my fault' and they would fix it 'as a favour'.) I wasn't impressed with the service (for the first time in 20 years).
However - since they have replaced the Power Supply, LDC Panel with BLC and Glass panel - all seems to be working fine. The imac is nowhere near as hot as it used to be - even when I'm running processor intensive apps.
I didn't break it, Apple. It was broke already.