Tom,

please try to use the variogram function in package gstat;
it doesn't (try to) store all pairwise differences, but rather
accumulates them for distance intervals.

It will take a while to do this, and there is a chance that
you overflow the counter that keeps the number of point
pairs for each interval: 304000^2 > 2^32; it is stored as
a C long, so may work on a 64 bit architecture. Otherwise,
I'd suggest to sample your data set.

I'd be interested to hear whether you succeed (or not).
--
Edzer

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