I'm planning to take it somewhere tomorrow, but I'm interested in getting new ideas in the mean time.
Symptom: I see the gray screen and Apple logo on boot, but after that it goes eventually to a blue screen and a cursor, and nothing else. Well, that's not entirely true, there's a cursor frozen in the upper left, AND there is a working cursor that I can move around the screen. File sharing was on before it broke, and it seems file sharing still works. Other sharing services were not on, and still aren't. The same is true if I boot from the 10.5 retail DVD (works in safe mode, doesn't work elsewhere). I did try wiping the boot drive and reinstalling everything to 10.5.0, from the DVD, which had to be booted in safe mode at the time.
What I've tried: I reset the pram (no change), I booted into single user mode (which seems to work fine) and deleted the loginwindow prefs because some advice online suggested that (at that time I was seeing a cursor on a black screen and after doing that I see a cursor on a blue screen). I've tried to get hardware test by holding down D, but it never seems to boot at all when I do that.
My working theory: since it doesn't boot from a retail OS X optical, I assume it is hardware not software. I can't find out what hardware is different in safe mode, but I am guessing it's related to the graphics card, because there is one other symptom, a subtle pattern on top of the background image (sometimes) of short horizontal lines, like a distorted stretched checkerboard.
I can't think of anything else to try, so if anyone has another idea I am eager to hear it. Thanks all