I have a 2006 iMac 20" Core Duo with the ATI Radeon X1600 GPU. Like so many others, my GPU has started crashing when it gets warm and the problem is becoming progressively worse. The machine is now basically unusable which is a real shame because other than the display freezing, it's still a perfectly good iMac.
There are several, long discussions on the Apple forums about this problem.
MacBook Pro laptops using the same GPU have experienced similar problems.
There's an on-line petition begging Apple to do something about it. I signed it but I don't have much hope of that being a solution.
If I can't get a free replacement or repair, I have to decide what to do with my iMac other than use it as a boat anchor.
Here's a guy that resorted to drilling giant "cooling" holes in his iMac.
Removing the Radeon X1600 display drivers seems like an equally extreme measure, but some people have reported it helps.
I have been using smcFanControl but the problem has gotten progressively worse. Now I run the fans at maximum just to keep the system usable.
I also run iStat menus because it will show the GPU temperature. I'm stable up to about 100 F. Usually by 105 F the display will freeze completely.
When the display is frozen, the CPU is still functioning. I can SSH into a frozen iMac and see all the processes are still running. However "screen sharing" does not work. I assume screen sharing relies on the GPU.
I am thinking about more extreme measures now. For example, I might find some use for the iMac as a server and just give up on using the GUI. I can use SSH to control it without a display. It could be a web server or something at least semi-useful.
I'd like to try bypassing the GPU entirely with a USB display adapter. In theory, I could use a USB adapter to connect an external display to my iMac and when the internal Radeon X1600 crashes, I could just keep working on the second display.
If the USB display adapter worked, I'd consider completely cannibalizing the iMac and finding a new case for it or finding a way to drive the built-in display from the USB display adapter instead of from the worthless, on-board ATI chip. For that kind of work, I probably need the service manual which I found although it incorrectly has a .txt extension. I had to rename it to "iMac 20.pdf" and open it in Acrobat.