Sounds like you know what you're talking about so I'll skip right to saying that it may just be a defective PS3.
The one and only thing that I would suggest is to remove and reconnect all the cables, although you've satated that games work fine so i really don't have high hopes.
Sorry but it really just sounds like some kind of video hardware failure and you'll want to exchange it a your retailer a.s.a.p.
I have connected new 80GB PS3 to a flat panel LCD 720p TV by HDMI cable. I followed the instructions and PS3 games play fine, the picture, color and sound is great. The picture is great on OTA and satellite TV also. However, the PS3 does not play DVDs or Blu-ray disks correctly. The picture on every DVD or Blu-ray is very pink. Everything is in shades of red. This happens on all DVDs and Blu Ray disks, all the way through the entire movie. I tried going back through the set up procedure but this is still happening. Any ideas or suggestions? Thanks.

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