bad printer isolation on print server or better way?
I know this doesn't help your current server situation, but something of note: Windows Server 2008 R2 and Windows 7 will allow you to setup Printer Driver Isolation. It allows you to run troublesome printers as a separate process, so they won't kill the spooler.
When we ran into problems like this, we found it was more related to mixed HP model print drivers on the print server than a bad driver. Once we moved all the HP printers to use the Universal print driver, our problems went away.
We have just gone through similar issues. Certain documents printed by certain users to certain printers will completely screw the spool service on a win 2k3 server and because of that, knocks all of the other printers out.
We didn't really find a suitable way around avoiding taking out the whole spooler other than have many print servers which is obviously not very friendly. However, what we have done is created additional queues for problem printers which use either PCL or PS drivers (basically whichever one is not currently being used). Call it the same thing with -ps / -pcl after it and advise users who are having problems to print to that.
It is also worth checking in services.msc on the print server that the spooler service is set to auto-restart itself. That way you may get away with just a few moments of downtime.
I guess you could also advise that people who need to print to the dodgy printer, do so via direct IP printing thus eliminating the print server from the equation all together.
As a work around until you get a more functional driver for the faulting printer, is to have a script run when the spooler crashes (recovery properties on the service). Have the script clear all documents out of the spool directory and then restart spooler. There is a slight possibility of losing print jobs, but usually when I see this the only job in the queue is the offending job.
Other things to check are making sure you are at the latest driver versions, or going back one version. Make sure your printer and IO (Jetdirect?) firmware are up to date. Finally, I have found that the Standard TCP/IP Port is much more reliable that using the HP or vendor-provided port type. We have print servers doing more than 600,000 pages/month and the port type seems to have the most affect on whether the print server remains stable or not.
Update:
For the script (batch file), it would be something as simple as this:
del /q c:\windows\system32\spool\PRINTERS\*.*
net start spooler
Then run the batch file as part of the service recover on first failure. You may want to have notifications go out on subsequent failures.