The project is ASP.NET 2.0, I have never been able to reproduce this myself, but I get emails informing me it happens to clients many times a week, often a few times in a row.>
Here was my fix.
Running IIS on a web farm, and each farm has a web garden count=3 each,
I simply made a seperate application pool just for sql reports and set that web gardern count=1 just for this reporting pool.
then, made a virtual directory in IIS and a seperate project for reporting - using that reporting pool
problem solved.