I had to review again a few times the video as the first few seconds as comes up scrambled on the old OSX 10.4 QuickTime. Now I see the start up screen come up scrambled but not rest of the video where it boots. VLC made me see the beginning.

This is an interesting error.

I think your Apple ROM is either Bad or a couple of pins rotted, not necessarily the Mega II Chip. It would be also why the BASIC from IIgs desktop also fails.

Like I said before, time to get that multi-meter and start checking address lines on the chips. Got schematics?