Yeah. I suppose the real thrust of my post would be I would definitely try ruling out RAM and any other possible cause before ripping the CPU modules apart.
First thing I'd do is pull out the non-Apple RAM. I never added any RAM to that Xserve but some *extremely bad* experiences with PowerBook G4s of that vintage say you should always blame RAM first. I thought the SDR Macs were picky about RAM until I dealt with the first couple generations of Aluminum PBs. Ye gads. If you have the diagnostics/hardware test CD I'd definitely try running multiple cycles of the memory test program. (With those awful Powerbooks it wasn't unusual to have it pass once or twice before blowing up.)
(Of course, the "Bad RAM" would always work perfectly in a Dell notebook...)
While you're in there, blast some compressed air through the CPU heat sinks. Apparently they're quite effective lint traps.