Can you get into Open Firmware? (Cmd + Option + letter O + letter F) If you can see text on the screen afterwards, then the graphics are rendering machine level text fine. From here, I would try resetting the nvram:
1.) Type in "reset-nvram" and press Enter
2.) Type in "set-defaults" and press Enter
3.) Type in "reset-all" and press Enter
If the iMac comes back with some text while completing step 1 or 2, simply repeat those steps until the iMac's responses don't appear. After step 3, the iMac should restart.
If you're still getting the same symptoms, then there is something wrong with the hard drive or something got corrupted during or after installing OS X. Try this:
1.) Shutdown your iMac.
2.) Press and hold down Shift key while powering on; this will place you into Safe mode.
3.) Wait awhile. The iMac should be checking the hard drive.
If you still have the same symptoms, I would:
- Restart the iMac and place it in Target Disk mode (hold down letter T before startup tone is heard)
- Reconnect iMac to another Mac using a Firewire cable
- On the second Mac, run Disk Utility. Verify and repair the iMac's hard drive along with fixing it's permissions as well.
- Afterwards, restart the iMac and reboot.
If still getting the same problem, check the PRAM battery. Make sure it is showing 3.67 volts or higher. If not, then replace battery. If still no luck, it may be the built-in graphics on the iMac's main logic board. Replace with a known good exact match logic board.
73s de Phreakout.