I've never seen this happen to my iPad 1 perhaps you should get it repaired. You know there is an insurance that when you break an iPad or it's broken you can turn it in and they will give you a new iPad for free in just a couple of days, but I think you have to buy the insurance with the iPad, but I'm not sure.
Another suggestion is to get it a screen protector. There may also be something wrong with your screen and the screen protecter will protect it from any future damage. The screen protector may also make the strange light go away too.