"coreaudiod" use all CPU%, overheat and crash iMac at 125%

Mid-2007 iMac (Lion) would slow to a crawl with constant HD spinning and overheating. Activity Monitor shows coreaudiod sitting at 40% CPU then climbes up to over 100%, crashing at 125%.

Quiting/Forcequitting process or killing it from the Terminal would do nothing as it appears seconds later and does the same thing. I've tried all solutions, from permissions, disk repair, fsck in single user, resetting PRAM and NVRAM, SMC, cleaning all caches, preferences, fiddling with the sound settings to see. Safeboot will not load coreaudiod and the system is stable. I have tried clean installs, sitting at each point update for a month before moving on using the combo updater and no permanent fix. I have resisted installing any 3rd party software to see if that triggered it. No the issue comes up on it's own. I have even transplanted com.apple.audio.coreaudiod.plist from both a fresh install of Lion and a previous TM backup. I also get the SBoD when opening Applications/Utilities//Audio MIDI Setup.app

The only quick way to fix this moving com.apple.audio.coreaudiod.plist from System/Library/LaunchDaemons. This effectively stops core audio from using my CPU but I also have no sound input/output.

I have reached my last straw, not wanted to do yet another clean install and the whole restoring from backup yada yada. This was a problem I experienced in 10.6 which was only solved by a clean install. The problem also rared its ugly head in 10.7.1 all the way through 10.7.4. now.

I'm afraid my 25+ years on Macs can figure this one out.