Okay. I would suggest bringing it back and having them run a full hardware diagnostic on this Mac. An erase and install obviously isn't going to help (but then, they rarely do).
Wanted to update this thread... in part to just thank the group, but in other part, to see if this sounds right.
So I took the iMac back in, and they sounded ok with what the first guy did (archive and reinstall), and were confused by the continual freezing. SO they ran more diagnostics and told me "your computer runs like a champ"... so they were obviously perplexed.
They suggested, and I agreed, that they perform a complete system wipe (zero out the hard drive) and reinstall. To do this, they were going to create an image of my hard drive, wipe it clean, reinstall Leopard, and go from there. The only real problem for me would be a) no computer for a few days, and b) I would have to manually reorganize any information that was on the "image" taken of my hard drive.
That did not seem so bad, especially if it meant no more freezing.
I called today, after not having heard anything since Sunday, and was told that they found the hard drive to be "bad" and were "replacing" it. I did clarify that this happened AFTER they made the image of the old hard drive - they confirmed yes. (thank god)
SO... sound fishy? Or does that sound like maybe a good deal?