When you say "hardware" I start thinking jtag interfaces, or even more interesting was this thing we would place every pin of the processor through and then connect to the socket on the motherboard, but I think I missing something.
Oh, I remember that one. SoftICE it was called, I think. I'm not sure. That was many years ago. Yes, that is one option but, if I remember correctly, that debugging hardware had a small processor of its own, completely independant.
those were _REAL_ ICE (In Circuit Emulators), I haven't seen an ICE since the days of hte i286.
SoftICE was a software debugger that had some ICE like functionality, I remember it as a Windows kernel debugger. I believe its now history, the company that created it was swallowed by someone else who later decided they didn't know what to do with it so they buried it.