Mine's been doing the same exact thing.. since my upgrade to Lion. Sometimes i can fix it by simply clicking Shift + Control + Eject to shut the screen off, then moving the mouse again. Other times, it freezes completely and i have to restart. I would guess it's Lion because it happened to me 2-3 times ever on Leopard/Snow Leopard and it's happened 10+ times since upgrading less than a week ago.
Rob, did the freeze have anything to do with Flash or running QuickTime or movies in iTunes?
It's a known issue with Lion that after the mac returns from a sleep state, running Flash, QT, or movies via iTunes will result in a freeze; the mouse cursor will still move around, but can't click anything. It's talked about here: https://forums.macrumors.com/threads/1196262/
I was thinking it was a graphical glitch. To be honest I don't know a lot about this but if its a logic board issue would that portion of the screen always remain distorted (even until the reboot)? I had a similar glitch with my menu bar but when I went fullscreen on Quicktime the glitch was gone. I then exited it and the menubar was still distorted. Is it still possible that it could be a logic board issue?
So far, for me, the graphical glitch was only apparent on the menu bar. When my logic board went on my G5 iMac the problem then was widespread across the screen. So I'm hoping that indicates more a bug within Lion than a logic board problem.
I don't remember if I was using flash, QT or YouTube at the time but I have experienced the issues mentioned elsewhere whereby the system becomes unresponsive apart from the mouse cursor moving, only then would a hard reboot remedy the situation.
I don't know for sure. But I think it could be Lion glitch, not hardware problem. Sometimes I get a flashy glitch when I browse using Safari in Lion. Don't ever show up in SL or BootCamp Windows. So I think it's Lion problem.
Same graphical glitches had been appeared on iOS 4.3 for iPod touch. But has been easily repaired by update