iMac Scrambled Graphics Issues - Hardware or Software?
Judging from the pictures you post, it's likely hardware. If you can swap out the RAM - that might be a nice place to start, but consider taking it in / calling Apple for service. Getting hardware assistance is FREE for the asking. Spend your time backing up your data before you dive in or get service.

Describe the pink tones, the scrambling of parts / horizontal / vertical lines - as well as the icons getting scrubbed.

It's certainly possible to be software - especially since you have three issues:


the pixelation of icon regions on the desktop (VRAM / compositing issues)
pink colors (indicating GPU VRAM / CLUT / shader issues)
vertical and horizontal areas of distortion (LVDS cable / LCD panel / GPU issues)


You'll need to go through an isolation procedure to be sure in your case. As long as it reappears regularly or you can discover what pushes things over the edge, you may have a hard time isolating things so getting professional help is often a good move to save you the time (assuming you actually want to resolve this rather than just learn what's happening)