Number of Active Client Requests?

I work at a school district with 100 G5 Towers, 50 eMacs and 60 iBooks all running 10.2.8. There are two, single processor, 1 GHz Xservers with 1.5 GB of RAM that are the Netinfo DB Master and slave. Half the computers point to the parent and the other half to the child for their authentication. When clients log in or machines get turned on "all at once" such as the beginning of the day or right after lunch, a significant number either hang on boot up or will refuse a log in. After a few minutes the machine is restarted and the login works. I would say that about 5-10% of the computers are effected and it's a completely random event. Also, there seems to be some moments when the computers just kick out a spinning wheel of death (as the teachers have now nicknamed it) and the computer will hang for sometimes over 5 minutes (sometimes coming back other times not). I have tried many ideas: reset permissions on the drives, load the 10.2.8 combined update from Apple, without doing certain security patches, monitored RAM usage. What seems to be happening is the server CPU spikes up to 80-95% utilization, but the network traffic barely hits 15 Mb/s. All this brings me to several questions: 1) If the server is getting flooded with requests, as it seems to be and cannot deal with the volume of simultaneous hits, what is the real world number of clients per processor? 2) Can I add a second processor to this box and expect better network performance? 3) Maybe I need to break the network down into even more netinfo server/clones and point the clients to a wider range of authentication servers. Any ideas would be greatly appreciated