Late '09 27" iMac blocks on screen

Late 2009 iMac 27" i7 / 4GB / 10.6.8

earlier today my imac froze with some blocky graphics on the screen. after powering down and restarting, it goes through the gray Apple logo and spinning gear screen ok, but as soon as the screen goes through 2 shades of blue, the imac freezes with the blocky graphics on screen. it does this on every restart.

i did the SMC and PRAM resets and repaired boot disk permissions with no change.

i can do a Safe Mode boot, but the screen has 5 columns of blocks that run down the screen and these blocks are repeating whatever is on-screen from other areas of the display, but not the arrow cursor. this is at the log in screen and the desktop, but not the gray Apple logo screen, that is normal.

if i do a Command-V "Verbose" boot, this same blocks are on the screen, getting in the way of the verbose text on black screen, then blue screen and freeze.

i took pictures of these various screens, but apparently in Safe Mode, the mac doesn't mount external devices, like a USB camera.

the only change lately was i updated the Safari Flash Player plugin about 6 hours earlier, but had rebooted a couple times after with no problems. this and the blocks on the black Verbose boot screen, make me think this isn't suspect.

i'm suspecting the video card. any other ideas before i take it to the Apple Store to get checked out?