It sounds like the execution plan is changing heavily between a local call and the SSRS call. Either that or data transfer on the network is amazingly slow between those two servers.
I'd start with a profiler trace to grab the xmlplan of the call when it comes from SSRS and then compare it to the one you get from SSMS. If they match, you have a problem external to the server. If they don't, you'll have to analyze the call differences between the two.
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