I've seen new age meditators describe the "grainy screen" - which is basically the grey fuzziness you see when you close your eyes. Some recommend staring into it and meditating on it.

Is this mentioned in Buddhist canon or tradition ?

You know, John, that question took me back a few years.  I used to know some people who could see through their eyelids because they had removed the consideration of there being a screen (remember the "...there is no spoon" young man in the movie, The Matrix?).

When you do purposely look at it in your meditation do you notice any change occurring -- with the screen or otherwise?

I went through a period when it seemed like I was looking through my eyelids when I woke up, like Daniel mentions, but I never took it for anything but a trick of the memory.

The grainy screen was said by a new age guru to be a property of the universe, something like the background radiation, but it seems to me just to be an aspect of the visual system.

The idea was to concentrate on the black space between the fuzzy bits and take your mind back to the timeless, not a bad idea I suppose as you are basically looking into black space and ignoring the mind. The claim was that you would then be looking at the primal universe before time, but I think you just look at your own self produced blackness.
It never did much for me. I've never seen it do anything but look like grey fuzz.
Pretty dull but it does show that our nervous system produces it's own sort of baseline light. I don't think we ever can experience pitch darkness - coud be wrong. It still might be OK as an object of concentration (is why I posted in this section) - I just wondered if it has been used like that before ?

I'm very new to meditation but for the short six months I've been into it I've done a lot of reading about it but I've never heard of that being used as an object of meditation. However, it wouldn't be surprising to me at all. I've heard of a lot of different things being the object including something similar which is the faint high pitch buzz or ring that is in your ears all the time if you concentrate on it. I thought that was interesting and it seems like the same thing as the screen in your eye but for the audio sence door. 

Then of course some people use the subtle sensations or tingling/vibrating on the upper lip. So, like I said, it seems like anything can be used...I wonder if anybody uses taste haha

I used to use it all the time, and specifically to get visions. I saw golden Buddhas and lots of cool stuff.
More strikingly, I also had a couple of precognitive visions -- which came true perfectly as seen in the vision.

I never had a teacher or guidance; I just used to play around with things. It's only since getting MCTB and hanging around here that I've found people talking about many of the cool things I've done.

Not quite taste perhaps, but I used to use the tingling pain on my tongue from eating extremely hot curries as an object. This was one of my first insight meditations. I could literally "see" sensations as bubbles popping all over my tongue and I used it to train equanimity.

I would think the grainy screen would be a better object than the breath because it is constant and unwavering, whereas the breath is hard to keep track of and tied up with emotional states - or maybe that's a benefit of using the breath ? Then again, the grainy screen is obscured by the visual component of emotional thinking. Hmm, interesting.