Sometimes you just get a bad one. It doesn't sound like the core has over-heated, not when they can stand up to about 100 degrees and the newer ATI cards do indeed have throttling capabilities to protect them.
Not necessarily. These things are quality tested, so a flaw right out of the box should be the less likely case. They do age though and given enough current, even the best made electronics will succumb to electromigration. 2.5 years is not too bad a lifetime for a graphics card; you probably wouldn't be able to tell if most high-end cards do actually last more than 3 years because they're obsolete by then.
Yeah thats right, we gonna bake the little bugger. then i created a aluminum plate using the aluminum foil and made 4 spherical balls from aluminum foil. Then i placed the Graphics card with GPU chip facing downward on the aluminum plate and used the 4 spherical balls to give separation in between. Placed the little bugger in the Oven and baked it at 200C for 20 minutes. Then i took it out and allowed it to cool in air. After half an hour i reassembled the card and voila! it worked 
Will post some of the pics taken during the procedure later.
