I have got the artifacts going around my screen as well since I upgraded to Lion 10.7.1. Once I upgraded to Lion 10.7.2, the artifacts gone. However, I still had the artifacts, and similar problems, like freezes, when playing video games or when using applications which demand too much from the video card, so I started looking at the video card and found that it was diying. I have like 5 days using the Mac Pro in safe mode because of this.
I would recommend you booting by using other OSX, like for example, Snow Leopard and see what happens in order to troubleshot if it's the video card or the OSX. If you have a Bootcamp partition, you can try there are as well and of course, running a video game. Another good thing, if possible for you, is taking the video card out of your computer and plugging it into a PC Windows and see what happens, even with video games. It's very possible that the problem is in the video card instead the OSX.
As a side note, my video card died since Lion.