The only real solution is to have the display panel replaced. An external monitor would be something of a workaround, assuming it's not the video chip that's bad (which is rather rare with symptoms like this).
Given the age of the unit, replacing the display panel probably isn't worth the expense. Even if you wanted to try it on your own, getting the front bezel off of those units is a PITA even if you know what you're doing. Try and do it without the proper tools, and you'll bend some very fragile clips inside the front bezel that will make it not sit right when you go to put it back on. This can be anything from a minor cosmetic issue to preventing you from being able to use your optical drive.
If you want to use an external monitor as a cheap temporary solution, you can certainly give it a shot, but I wouldn't spend any money on repairing this thing. Put that money towards a new unit.
Also, in the future, it's generally not a good idea to post the SN of your unit. I'll go ahead and report it to the mods and hopefully someone can edit it out of your post for you.
The monitor on my iMac OS X purchased 12-06--serial # xxxxxxxxxxxx-- is beginning to have colored vertical lines and distortions . Would hooking up another monitor to my computer be a solution for this or would these distortions just be mirrored on the attached monitor, or is there any other way to solve this problem?
Note: This post was edited by a forum moderator to remove serial number on 11/28/2011 at 9:02 AM PT