Daniel, I've never seen Photo Booth and have no access to it. Only people with a handful of the latest Mac models have it or can get it. Therefore, repeating your description of the problem as something that looks like Photo Booth will do very few potential helpers any good. Instead, how about describing what your display actually looks like?
While you're at it, how about telling us exactly what Mac model you have, and what display you have (if the display is separate from the Mac). Also, whether you had changed or installed anything immediately before your problem started, and whether the display problem occurs in all applications, only in iPhoto 4 or earlier, or only in certain applications. Does it occur when no applications are open at all?