La di friggin da! The 10.6.2 update miraculously fixed things. Now submitdiaginfo just sits there taking up 30MB and 0% CPU cycles. UGH....
EDIT: Nevermind, I had two days of bliss and it starts up again. Screw you apple.
FINALLY SOLVED: So it turns out an old test install of Moxy backup had never been properly uninstalled and was making calls every 10 seconds to perform backups and obviously nothing was happening. I suspect this was creating a massive log file for submitdiaginfo, apple's automated diagnostic tool. Obviously everytime the thing launched it just sucked up massive amounts of RAM because it couldn't handle such a log file. The first fix was to reset the submitdiagtool so it would not longer function unless there was an active crash. Second solution was to deactivate the Moxy backup as a launch daemon. It works great now, but I still blame apple for actually allowing a log file to be created that would cripple submitdiaginfo.