[dnanian]

It sounds like your panic started well after the backup copy was made. If so, and the backup won't boot, it seems likely to be a hardware issue. (You kind of want to figure out what's preventing normal startup by examining the system.log, but I assume Apple did that with you.)

Certainly, you can try the archive and install. Don't do this on your backup -- do it on your real drive (it can't really hurt anything, because it's isolated to system files, and this way you retain your backup). If it works, it works... if not, you'll have to figure out what kernel extension or startup item is failing.