Hello all,
TLDR; Installing Java (Directly from Oracle), or the combination of steps taken including this Java installation, fixed this issue for me.
I'd like to start this whole post off with;
WOW!
I recently inherited an iMac that appeared to have issues similar to those noted here. Most GPU accelerated functions (Such as Videos, even flash media) would play completely corrupt. There were jagged colourful lines, and general 'media' corruption. These did not come out of the window that presented the issue. Even iTunes video content was a problem. It was really odd.
What upset me the most; the fact that the iMac ran FLAWLESSLY otherwise. And I mean flawlessly. Hardware Diagnostics returned without a hitch, applications load quickly - though I do not have any games or anything to test anything too fancy.
In my experience, most GPU failures are rather terminal. This seemed way too isolated, especially with everything else running, again; flawless.
I've been pulling my hair out, lack there of; trying to sort this out.
I can not 100% confirm the final fix, but it appears installing Java (Directly from Oracle) fixed this issue. I had tried all other settings, transparency, etc - with no luck. In my final stages of deciding; this machine will just have to remain a developer box - I installed Java. And everything is working. iTunes media content is working. Flash video's are working (Stock standard Safari).
Other steps I had tried during troubleshooting (In order, in case this is important);
Reinstall OSx, using both internet installation (Which installs Lion on this generation), and USB Yosemite installers.
Transparency settings
Colour Profiles (Including calibrating my own)
Power Settings - Though my model does not allow me to disable GPU switching, clearly.
Contacted Apple directly, and spoke to a technician (Chat) regarding the case.
Finally;
I googled "Apple Java Installer", which took me to the Apple KB page for their last release of Java for apple. Reading the notes, it stated; if you need the latest Java, download the Java for OSx directly from Oracle.
I downloaded, installed - And even without rebooting; 100% flawless.
Thanks to all that posted their notes on this issue. A few people suggested the Java install - and just as many said they tired, and failed. To those; Make sure you used the one from Oracle.
I'll post back if this deteriorates or returns. Otherwise - fingers crossed.