Kernel Panic - Hardware or Software?

Question

Kernel Panic - Hardware or software?
Mac Pro Early 2008. 2 x 2.8 Quad Core. 16 GB RAM. OS X 10.8.2 (12C60)
This morning my Mac Pro Refused to start.
It goes into an endless cycle of the grey panel message "Your computer needs to restart etc. ...... " with each restart failing.
Here is what I have done and discovered so far:
1) Disconnected all peripherals and network and secondary monitor leaving only principle Apple monitor, Apple Keyboard and Apple mouse. No help - Problem remains.
2) Done a recovery start up and repaired disks and permissions (nothing significant found there). No help -  problem remains.
3) I can do a safe boot and have tried rebooting from this. No help - problem remains.
However inspecting the system from Safe Boot starts to show some interesting things.
4) If I open Acitivity Monitor and look at RAM it is completely clogged with Page Ins (Over 14 GB of them). The Pie Chart is completely red. This would look like a RAM issue. There is almost 160 GB of free space on my startup disc and 16GB of RAM Installed.
5) "About this Mac" Memory tab correctly finds and identifies all the DIMMS and shows their size and slots correctly.
No. 4 would seem to indicate a memory problem but No 5 would seem to indicate that the DIMMS are functional and the system able to address them.
I have tried removing the DIMMs and trying them pair by pair and in various different combinations. No change. The system can consistently identify them and their slots but the Only Safe Boot works and the Page In log jam is always present.
I am mystified as whether I have a hardware or software problem here. If it is software then a full clean re-install followed by a time machine restore may solve things. What worries me is that if I have a hardware problem and attempt this I may end up with no OS as well.
Any suggestions for further analysis? Any wisdoms greater than mine can explain the significance of the Page ins? Should I try re-installlng first or is it time to visit the repair shop?
Any help welcome please.
David Mac

Answer 1

Sorry to be late responding. I have been unexpectedly bedridden since posting and only able to try your suggestion today.
Sadly I cannot get Apple's hardware test to run at all. Holding down the D key does nothing at all. Accessing the test by internet isn't going to work on a 2008 machine. Tried the original installation disc as suggested by apple. Doesn't work. Since Lion install I cannot start up from any disc pre Lion-  it causes a black screen 'You need to restart ......".
So stymied for now.
Looks like I'll have to try ans see if a full clean re-install will work. If it doesn't then back to the shop.
I have the whole system fully backed up externally so nothing to lose in the long run. Just don't want more chaos than necessary ;o)