I had set a vertical gradient from bright grey (#999999) to dark gray (#666666) as my XFCE desktop background image (a.k.a. wallpaper).
And in a later Pandora session I observed the seemingly same experience as @PowerGod:
Horizontal lines in very close succession (every 3mm or so) which alter the brightness of their underlaying content, and which move on the vertical axis (cannot recall wether up or down, movement from my memory about 0.5cm/sec).
I moved my Pandora within my room as I suspected electromagnetic interference, but that didn't change it.
Restarted, then the problem was gone!
I retroactively tried to determine the issue:
Besides:
1) a hardware problem, such as
a) shielding,
B) loose contact / pressure on cable through hinge,
c) ...?
2) I more strongly suspected that a software left my Pandora in this state.
a) Could not remember which one it could have been. Had recently used: Giana's Return, PicoDrive with both NTSC 60hz and PAL 50hz games (suspicious!), maybe others as well or in parallel. Impossible to tell now. Tried them all. Could not evoke the problem.
B) Ran sudo /usr/pandora/scripts/op_lcdrate.sh with both the 50 and the 60 argument. Could not reproduce the issue either!