Is this display distortion (ATI Radeon X1600) a hardware problem?

I have a MacBook Pro 15" 2.16 GHz with an intermittent display problem. At first, I thought it was a problem with specific software (VLC), but later it would happen with other applications and eventually it began to appear on the boot-up screens as well. I have the system set to boot in verbose mode and those screens would be corrupt as well.

The problem developed very rapidly and by the time I took photos of the screen (see below), I could no longer get past the boot-up screen.

Is this a hardware or software problem? If it's hardware, is the display board part of the main logic board or is it separate? Is the video RAM replaceable?