[psiphi]

Use can use the PPCKitchen and the OEMizer to disable the Screen Align Screen, but it requires burning a new RoM, and it won't fix the screen. It will allow you to use the parts of the screen that do work, and use the keyboard and buttons for navigation and input. You can also use MyMobiler to remote control your phone to make it easier for setting up...

The bad news is you need a new digitizer or phone, and a new phone would be more cost effective. I would use the phone you have as a Digital Picture Frame or a Weather Station connecting via Wi-Fi...