Temperature dependent emission spectra of spin excited iodine in crystalline Xe and Kr are presented and analyzed in terms of nonadditive anisotropic pair interactions. In the octahedral trap site, the atomic P-2 states split into E(1/2) and G(3/2) groups of the double valued representation. The fourfold degenerate G(3/2) state is subject to strong Jahn-Teller instability and further splits by coupling to phonons into E(1/2) and E(3/2) Kramers pairs. Accordingly, the observed emission spectra are composed of two bands : 2E(1/2)-->1E(1/2) and 2E(1/2)-->E(3/2) transitions. Two pairs of bands are observed each in Xe and Kr. The long-lived pairs (at 15 K, tau=250 mu s and 930 mu s in Xe and Kr, respectively) are assigned to the isolated atom, while a short lived pair of bands (at 15 K, tau<1 mu s in Xe, and tau=2.2 mu s in Kr) are assigned to I atoms trapped as nearest neighbor to a localized charge, identified as (HRg)(+). The isolated atom spectra are simulated by Monte Carlo methods which assume classical statistics in the heavy atom coordinates, and adiabatic following of the electronic coordinate. Angle dependent, gas phase pair interactions are used as a starting point. Minor modifications, to the pair interactions, and a temperature dependent spin-orbit splitting constant, adequately reproduce the experimental spectra. Many-body contributions to the effective pair potentials can be estimated to change pair parameters by less than similar to 3%.