re: Help identifying odd iPhone screen issue?

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Does anyone know what causes this or what mechanisms in the phone would lead to such a delay in the damage showing up then reversing itself partially?

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I don't "know" what happened, but I can speculate based upon basic knowledge of how LED screens operate. LED screens are a matrix of very small Red Green and Blue LED lights with the ability to change brightness. How the brightness is applied to each of the RGB channels allows them to reproduce about 16 million colors for an 8 bit device (256 brightness levels/channel), 134 Million colors for a 9 bit device (512 brightness levels/channel) or an astounding 1+ Billion colors for a 10 bit device (1024 brightness levels/channel). (As an interesting side note, the human eye can only distinguish about 1 million unique colors...)

Anyway each of these LEDS has three inputs, power, ground and data. The data signal controls a resistor or group of resistors that changes the voltage to each channel of the the LED producing the brightness for each channel. It then passes the data signal to the next LED. It's possible that when you dropped it you damaged one of the three inputs to the led causing an over voltage or under voltage situation. Eventually this would either "fry" or disconnect the first (or last) led in that row. Since all the LED's in a row are wired in series, this failure mechanism would cascade down the row until it damaged the entire row.