The Apple guy called it something but I can't remember what the exact term. He did call it LED contamination but the Genius Bar guy said even out of warranty issues of this type are covered under something like, (paraphrasing), "quality usability standards".
Even if it is dust, Apple knows they erred by allowing dust to get in there.
People may be getting turned away from the free repair by the wrong Apple person. For example, when I first walked in, I got the line that I need the serial number, to see if it's even covered. When I finally made it back to the guy at the Genius Bar, he told me what I stated above. Before I even finished my sentence to the Genius Bar guy, he finished my sentence by saying 27", right?".
It seems to me like they're treating the issue like one of those voluntary auto recalls.
If they tell you "No", find the Apple employee that know's that "Yes" is the correct response. I recommend a face to face with someone at their Genius Bar.
Victory! You were absolutely right.
After setting up an appointment through Applecare, the guy at the Genius bar authorized a free replacement of the LCD for an Out of Warranty iMac under the mysterious "Quality Program" - I have it on black and white (actually crossing out the $764 fee).
Although he does recommend a 'cleaning of the LCD screen' before the replacement to see if that solves it - but this won't do a thing. They did that in 2011 as well: first have a 'dust cleaning,' then call me to say my machine was fixed, I go pick it up only to find out back home that the problem is still there. Then haul the thing back and have them replace it... hope this won't happen now, I will have to insist on a proper replacement, given that it only clearly shows when the machine has been running for a while, producing heat.
As to the cause, he did not say anything, a little evasive even. He was at least honest enough as to say he had 'no idea', and that only the engineers really know what's going on. Which is a basically an admission that something is flawed at the basic level of design. No long spiel about 'environmental factors' this time.
Here's the rundown of diagnosis, as they handed it to me:
"Issue: customer stated he can see a strange anomaly on his screen that looks like a stain on the LCD's right side.
Steps to reproduce: Verified the issue visually. Large streak down the right side. Used alight background and could see it.
Proposed Resolution: Try cleaning the LCD screen as suggested in gsx first, if this does not resolve the issue then proceed with a replacement."
Only downside is that they did not have the part in stock, but it's been put on order. Might have to miss the machine for a week, so I'll get some good use out my old laptop. But I don't want to keep dragging that thing along, so I left it there. I've got most of my stuff on Dropbox, so no biggie.
Only thing that concerns me is whether that problem will pop again after a while with the replaced part.
Anyhow, yes, there is hope! Just ask for the "Quality Program" when you have this issue

Thanks all for this fantastic thread - give Apple a try before opening up your machine.