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Called Apple yesterday...the rep had NEVER heard anything like this, but here goes:
When going to take pictures close to a neon sign, there is a strange linear feedback which appears. Vertical lines that fade the further I get from the sign. This happens most of the time I try to get a shot of the intense colors of the sign. Another wrinkle: this phenomenon is accompanied by erratic camera behavior like spontaneous enlargement of the image, and inability to focus/expose. Sample below. 
Can someone be a dear and try to replicate this? My friend's i4S did exactly the same thing. My 3GS didn't have this problem. Any ideas/workarounds?

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