Microsoft has dropped support for the Microsoft VM and this leaves applets in an uncertain position. Sure, you can just install Sun's JVM but it won't work on your Microsoft IIS-based intranet if you are running NTLM. I have seen this problem at several clients where “single sign on” is essential and NTLM is the mechanism in use.
Here is the bug fix report on java.sun.com (free registration required).
This will keep the door open for technologies such as Microsoft's Remote Scripting from ASP which use a hidden applet to make calls back to the server. I have played with non-applet based approaches to invoking Remote Scripting such as one based on Brent Ashley's JSRS but I never could get the synchronous calls to work.
Roll on 1.4.2_02 !