Well, did alot of fiddling around with extensions and kexts, and this is what i have to share about failing ATI video gpu solder.
After many hours of going over what ATI driver will and will not work, i have found out that booting into safe mode and taking these extensions out and putting them into a folder called "Extensions Disabled" will allow your iMac to boot into normal mode and run with limited functionality.
I took out all the ATI drivers that were not needed for early and later models of the ATI cards, aka the x1300, x1900, 2000, 3000, 4000, 5000 and 6000 series cards.
I also took out
ATIRadeonX1000GA.plugin,
ATIRadeonX1000GLDriver.bundle, since with those in the extensions folder, those caused the video to heat up and glitch out.
These are the drivers that are currently installed to make the video work.
ATI1600Controller.kext,
ATIFramebuffer.kext,
ATIRadeonX1000VADriver.bundle,
ATIRadeonX1000.kext &
ATISupport.kext.
Those are the updated drivers supplied by the OS 10.7.5 update.
With those 5 extensions enabled, this is what System profiler now says about my video card.
ATI Radeon X1600:
Chipset Model: ATY,RadeonX1600
Type: GPU
Bus: PCIe
PCIe Lane Width: x16
VRAM (Total): 128 MB
Vendor: ATI (0x1002)
Device ID: 0x71c5
Revision ID: 0x0000
ROM Revision: 113-xxxxxx-139
EFI Driver Version: 01.00.139
Displays:
iMac:
Display Type: LCD
Resolution: 1440 x 900
Pixel Depth: 32-Bit Color (ARGB8888)
Main Display: Yes
Mirror: Off
Online: Yes
Built-In: Yes
I also now have functional screen dimming and screen resolutions unlike before where i was stuck at 1440x900 and the screen wouldn't turn off.
Now it goes into sleep mode and i am very happy.
Pro's and cons of doing this.
Pros:
GPU doesn't heat up
full screen resolutions
can watch videos on the web *aka html5 and flash without any stuttering*
screensaver ability *though a little choppy*
ability to run a crippled iMac as if it were "semi" new
Cons:
no full OpenGL support
no 3D gaming support
Bootcamp and Windows will not boot with crippled video.