The Colecovision is probably the worst built game system ever. If they could save a penny in production, they did it.
While it is only a guess, I am guessing they had some cheap chips that used weird voltages (IIRC, the video RAM uses 9V)
I was having endless problems until I put a new power switch in it. I have no idea why these switches are so bad. The 2600 use the same exact type of switches.
A couple of years ago I removed the switch, took it apart and cleaned it thoroughly and within a few days the graphics glitches came back. Even when it was working, the screen was never good and was always fuzzy. After I replaced that goofy switch with a single switch double throw switch from radio-shack, it was fine. It's a shame you can't get them anymore with radioshack being gone.
Transformers pretty much never go, though. There are radios from the 30s and 40s whose transformers are still fine despite many thousands of hours of use. Everything else in that power brick should be just standard stuff you can order from mouser.
Sorry, but I have to call this out for the bullshit that it is. Just because you have had issues with ColecoVision consoles that you have been unable to reliably fix does not provide factual evidence that it was the "worst built game system ever". The ColecoVision that I bought way back in July 1983 still works flawlessly. Does this mean that I think that the ColecoVision is the best built game system ever? No it doesn't. I'm sure it wasn't the best built, but it most certainly is far from being the worst built. It's two weaknesses are the power switch and the video ram going bad. But, what do you expect from consoles that were made 35 years ago with a design life much less than that?
With regard to the power switch, of the two switches that I have had a need to refurbish they have worked perfectly ever since (5+ years later). You also comment that the switches are goofy - well they are of the same design as those used in the Intellivision and I suspect many other devices.
And no, you do not remember correctly, the 4116 video ram chips require three voltages, +5V, -5V and +12V. The 4116 was also used in TI 99/4A computers and some Williams arcade PCB's like - Defender, Joust, Robotron. So, Coleco's choice to use these chips was not some crazy ultra low cost precedent.
BTW - transformers do fail. Just ask anyone in the Commodore 64 community who fried their computer with old Commodore power supplies! Fortunately, the failure mode of the ColecoVision brick isn't so deadly - and many ColecoVision power supplies have failed in more recent years.