Same problem. Three times to Apple Genius staff. Not fun shlepping this 27" iMac back and forth. Am on my third Apple Senior Adviser now.
I'll tell you what DOES work: boot in Safe Boot [Turn on power while holding down SHIFT]. Of course you lose a lot of video and audio. But it will work. Acts somewhat funky.
Now, why would I have to discover this myself? Why wouldn't Apple at some level suggest this as a workaround? Perhaps because it clearly narrows the problem. Why would Apple want customers to ask logically: Hey, it works in Safe Boot, but not normal boot? Can't you use that information to find a solution?
Too simple.
It's hard to imagine that Apple does not know about this issue.
I suspect that they will just stall all of us until the three year Apple Care Warranty expires, and that will be an end to it. Apparently they decided that it's better to waste the resources of Apple Genius Staff and Senior Advisers on this problem, than ship a replacement and honorable honor the Warranty. In business terms, the Apple Genius staff are fixed costs, as well as the Senior Advisers. So it costs Apple nothing to expend time on this useless pursuit.
On the other hand, to replace the iMacs DOES cost real money in terms of product shipped and not paid for. In addition, a cynical decision was made that a certain percentage of unhappy customers will purchase a new Apple machine, regardless of their experience.
And that's where we are. The Senior Advisers seem to be unaware of this thread, and there is a grand and laughable game of pretend: Apple pretends that they are honoring the Warranty, and you all pretend that you understand Apple's sincerity here.
These are defective computers, and all of us should start writing the Consumer Protection departments of your State's Attorney General office. Otherwise, you will just give up out of frustration.
One last thought, my warranty expires end of this month. I started complaining about this beginning in March. Although the Apple Senior Advisers assure me that they will still honor the warranty even after it expires, because I brought up the problem within the warranty period, does anyone really believe that as soon was the Warranty has expired, no one a Apple Care will even speak with you on the phone unless you start paying for service? You will be told that Apple Senior Advisers are not authorized to extend Warranties. After all a Warranty is a specific, written legal promise.
Well, I hope that helps this discussion. Remember: try Safe Boot for functionality, although limited. For some it may be OK.