This is a late post but may help others. EDIT thank you Justin C for posting valuable information.
I successfully upgraded my T3500 (w/ MB 9KPNV) from a E5507 (45 nm, 4C/4T, 4M Cache, 2.26 GHz, 4.80 GT/s, TDP 80W, no TurboBoost) to a X5670 (32 nm 6C/12T, 12M Cache, 2.93 GHz, 6.40 GT/s, TDP 95W, w/3.33GHz max TurboBoost) without any issues.
Still have the original Samsung 6Gb DDR3 1333MHz ECC ( PC3-10700) M391B5773CH0-CH9 but waiting on additional 12Gb (on the way)
Here are key things to have on hand or to be done for the hardware changes:
update BIOS to the latest available A17
got an server pulled X5670 ($143.98 on Amazon Dec-2015)
replaced the original Low TDP plain aluminium heatsink P/N 0T021F pictured below
by the a heatsink P/N U016F (w/ heatpipes) ($20.00 on Amazon Dec-2015) to support higher TDP
Followed the Dell T3500 service manual Heatsink and Processor section.
Note the manual shows pictures of the P/N U016F installed and the correct orientation of the heatsink.