Anyways this is what the damage was, touch was fine, pixels were fine. I guess it was the backlight.

As you can see, the screen was damaged by a liquid known as Acetone/nailpolish remover which trying to fix the home button. Some of it seeped in the screen because i tilted the device upside down :/

Follow the steps to open up from the iphone screen replacement guide.Going to do the repair. Well i had no idea if i could fix it, just wanted to find out what exactly was wrong.

now we have the screen out, and that chrome with while border is a casing like stuff on the backlight, so i took it apart by peeling it off gently by the white plastic frame.

There we are, the chrome part is out, the backlight is naked and you see that transparent plastic part lying there, that is like a fiber optic transmitting light from the LEDs to the whole screen. That was basically damaged by that acetone/nailpolish remover.

This is the plastic part (ignore the crack because it broke while taking it out). But you see that damage on the top. Looks as if someone spilled acid :O. So basically light transmittance was obstructed to that part hence the dim spots.

So i got this damaged iphone 4 screen from a local repair guy, gave it for free as its of no use to him.

But make sure the back LCD/Backlight part isnt damaged or missing.

took out the part, extracted the fresh, non damaged plastic backlight part out from it.

And just replace the part and put everything back with the chrome cover with plastic frame back on and reassemble your phone.

Sure looks back to what it was. at least 95% of it. Well its a job involving no cost at all ! worth that effort :)