We're thinking we may have been encountering some threshhold in IIS we were (and are) unaware of. Some line that can get crossed even when the server itself is only working under a 25% load.
We found a few things that we're optimistic will help a lot. Matt's doing something on the machine right now and will be rebooting in a bit, but we're both optimistic it's going to run a LOT better tomorrow.