Well this was an interesting one.
The root cause turns out to be a change in the behavior of SQL Server Reporting Services’ LocalReport class (v2010) when running this on top of .NET 4.0.
Basically, Microsoft altered the behavior of RDLC processing so that each time a report was processed it was done so in a seperate application domain. This was actually done specifically to address a memory leak caused by the inability to unload assemblies from app domains. When the LocalReport class processed an RDLC file, it actually creates an assembly on the fly and loads it into the app domain.
In my case, due to the large volume of report I was processing, this was resulting in very large numbers of System.Runtime.Remoting.ServerIdentity objects being created. This was my tip off to the cause, as I was confused as to why processing an RLDC required remoting.
Of course, to call a method on a class in another app domain, remoting is exactly what you use. In .NET 3.5, this wasn’t necessary as, by default, the RDLC-assembly was loaded into the same app domain. In .NET 4.0, however, a new app domain is created by default.
The fix was fairly easy. First I needed to go enable legacy security policy using the following config:
<runtime>
<NetFx40_LegacySecurityPolicy enabled="true"/>
</runtime>
Next, I needed to force the RDLCs to be processed in the same app domain as my service by calling the following:
myLocalReport.ExecuteReportInCurrentAppDomain(AppDomain.CurrentDomain.Evidence);
This resolved the issue.