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I was playing a custom level in LittleBigPlanet. I made this giant spinning rocket in the game that apparently pushed it to the limit, because after coming to a painful cut in framerate, the PS3 totally shut down instantly, and gave nothing but a flash of a yellow light and blinking red one when trying to turn it back on.
I bought the YLOD repair kit even though the guide seemed daunting, and after a few hours of disassembly, solder reflowing (with the included heat gun), and thermal paste application, the system was running again good as new.
At one point in the guide, I came across a photo and step that didn't quite match up to the guide--I had to remove two extra screws in order to slide out the ground strap. At first I thought I would have to write into iFixit to have them change the guide, but for the good of all humanity and to my own surprise, all the guides are fully-editable. Not an hour after finishing the repair, I hopped onto the guide and made the change, along with updating a photo as well.
Thermal paste is harder to apply than you might think. Its consistency is more akin to chewing gum or "sticky tack" than glue. In addition to the plastic spreader card included with the kit, I followed the tip in the mini thermal paste guide on iFixit and used my finger covered with a plastic bag to cover the spots I missed.
Also, if you can't seem to find some of the thermal pads instructed by the guide to remove before applying the new ones, check the motherboard covers. In my PS3, the old thermal pads had actually melted to the metal casing and had to be scraped off with a spudger. Don't start putting your PS3 back together without checking to make sure this is not the case; you might end up putting it back together with the old thermal pads still inside the machine.