LED #3 is for the connection between the logic board and the LCD. Have you tried reseating the LCD cable?
LED #4 has to do with temperature sensors, I think. It's actually good that that one remain off.
You say no response from the keyboard: Does CAPS LOCK light up when you press it? Can you insert a cd into the optical drive and then eject it with the EJECT key? If yes, then the keyboard is responding and you are just not seeing it.
So, back to no video: Are you able to connect the iMac to another monitor? If the external monitor gets an image, and if the iMac screen is completely dark,then it may just be the inverter that's failed.
Can you see a faint image on the iMac screen? Then it may be either the inverter or the LCD panel or both.
If the external does not get an image, then it's most likely the logic board. :-(