OSX not only requires a fast video chipset and memory, but also one that can process complex compositing instructions in parallel pipelines using various APIs. OSX is just as demanding as some advanced videogames in terms of compositing.
If any part of the compositing hardware is below spec or faulty, you get random problems with display output.
In a very real sense, you're better off with a lowend videcard that makes no attempt to render CoreImage/CoreVideo/CoreAnimation, than one that "can do it" but crashes in the process.
Most of the reports seem to be associated with iMacs that have the 2600 Pro chipset (and 24" display), which is in all likelihood, exactly the same chipset as used in the 2400, except that it is running at higher frequencies and has more pipelines/paths etc... enabled.
ATi might be able to "make" 2400 chipsets from 2600 chipsets, by simply flashing the ROM with 2400 settings, using samples that either cannot run at 2600 specs, or alternatively by flashing-down "good" 2600s in order to meet a current demand for the 2400.
They cannot however, reliably "make" 2600s out of 2400s.
This is what I think might be happening with some iMacs.
Just a guess based on anecdotal reports from iMac owners, and my own experience with failures due to overclocking and flashing videocards in PC gaming machines.
The symptoms are virtually the same for both scenarios.
One thing I would try is to reduce the desktop resolution to one of the lower settings to reduce the load on the GPU; if the lockups and display corruption are reduced or eliminated, I would suspect that the GPU is simply working beyond its capabilities at the higher native resolution.
Reducing the clock frequencies and disabling pipelines via third party utility (if available for OSX) would be another possibility that would lead to a similar conclusion.
