Hi,
I was having the same problem with my 8800GT (2008 2.8ghz). It would happen when coming out of Windows, generally a quick reboot would fix the issue.
After a couple months of dealing with this it finally hit its worst last night. I was trying to do something somewhat GPU intensive, the screen would flash full of those green pixels, then some blocking and finally the screen would start flashing. At this point the video was locked up and I had to hard restart.
At first it would go away unless I tried to do something intensive again, after a couple reboots I cant even get into OSX. It will load the dock and then the pixels/blocks appear and video is frozen again.
I have a new 8800GT coming from Apple, hopefully it will solve the problem. If it isnt the GPU I dont know what else it would be.
I would definitely keep an eye on it!