He suspects that it is a logic board problem but has kept it for some overnight testing... Let's hope it's not the LB as it's going to cost £460 to fix ):
Now hold on a second... How old is this machine? and how much did you pay for it?
I have to ask, because just because it is out of "warranty" doesn't make it automatically your problem.
I'm assuming this is a UK purchase as you quoted the repair costs in £s.
I had bought a LCD 22" tv and within 18 months (so 6 months past the guarantee) the sound failed on it. I contacted the shop, they said no dice as it was out of guarantee, I then quoted "Trading Standards" & "Not fit for the purpose it was sold".
The shop then told me to go get a report that says it was not due to me chucking a cup of tea at it (well, it was a report to show that it was a fault with the PCB).
I sent this report to them and they still tried to weasel out of it because the report did not explicitly say it was a problem at the time of purchase.
This time, I wrote to head office (recorded delivery etc) telling them with reference to the "Sale of Goods Act 1979 (as amended)" that the TV "is not of satisfactory quality.".
They sent me a cheque for the full cost of the TV, the report and all postage costs.
My point is, that although I am sure that Applecare is a great service and offers more than an extended warranty would do, it is NOTa prerequisite for sub standard goods to be repaired or replaced.
Under the simple "reasonable" rule, how long should an iMac last? My TV lasted 18 months and cost "only" £300. How much did you pay for your iMac and how long did it last, I'm guessing it is less than 2 years old?
Don't just put your hand in your pocket to get this fixed, Apple still have some responsibility.
Trading Standards are there to offer impartial advice re this type of thing, take a few minutes to look it up.
Hope this helps.
J.
