I'd choose 60/40 Tin/Lead solder balls though... lead-free solder is a bit stiffer and prone to crack.
Lead free solder is a nightmare in critical devices as the solder promotes tin-whisker formation that can short out components.
The tin whiskers may actually be the modality of failure at work here, Bobalu. It would explain all of the symptoms. Whiskers growing from both directions across such small gaps will, occasionally touch under both minor flexing and also under heat expansion resulting in intermittent shorting of the IC connections. It would explain the flashing, irregular grey bar. Arcing, even at micro voltages and amperages,acts like that as it connects and breaks the connection.
Thanks for the photos; informative.
WE can thank the radical over-the-top Enviro-Nazi nutbags for requiring lead-free solder.....