This is not an uncommon problem. I've seen it more than once, usually on machines that have been having problems with the display for a while. In my experience, it's been a bad component related to the HV circuitry. There are a few things that can cause it (cracked solder joints, bad flyback transformer, leaking capacitors, etc), so I can't tell you exactly what to look for. My bondi did this, too, and the culprit was cracked solder joints on the flyback transformer. Resoldering those connections did the trick for me, but like I said, any number of failures in the power supply/CRT HV circuitry can cause these problems.

Some links that I found googling "imac glod" and "imac green light of death": http://forums.macrumors.com/showthread.php?t=60745

http://www.macgurus.com/forums/archive/index.php/t-12877.html