The customer has a multi-tabbed application as an applet used in their product.
In the UI they sometimes have to change the z-order of panels. To do that they remove the panel from the container and add it back at the 0th index. When switching between tabs, or even while updating any z-order of any awt component in the applet the CPU usage shoots up to 100% and the browser stalls for 10-30 seconds. The same applets work fine with the Microsoft VM plugin.
After some testing it was concluded that there is a performance regression over 1.3.x ,where no such issue is seen.
I tried to simulate the problem with various JRE:
1.4.2_03 = Problem in performance
1.4.2_02 = Problem in performance
1.4.2_01 = Problem in performance
1.4.2 = Problem in performance
1.4.1_05 = Problem in performance
1.4.0_02 = Problem in performance
1.3.1_09(Last FCS)= Working
1.3.1_04 = Working

There is no issue in the 1.5b32 JRE either. But 1.5 can not be recommended to the customer as they have to go live within a month.
The CPU usage problem exists for IE, Mozilla as well as for Netscape.Clearly a JRE-plugin issue.

The attached Java source and HTML can be used to simulate the issue. Clicking on the 'Next' button of the applet will change the z-order one of the two panels in the applet.
If you try to access the same HTML/applet on a unix machine there is no performance issue with the same JRE version, however on windows the CPU usage just shoots up.
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One more thing, the CPU usage issue is solved with swings, but since it requires the customer to re-write their application(both for converting from awt to swings, and for rewriting z-order switching), its not a viable solution. They want their application to run as-is, as it did in Microsoft VM.
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