By default, all Java applets you view online are downloaded and stored in ~/Library/Caches/Java Applets/cache/javapi/v1.0. Also by default, this folder can amass over 50 MB of Java applets -- though it's not much in these days of 120GB hard drives, older computers might need some extra space to keep running smoothly.
If you navigate to /Applications -> Utilities -> Java, and launch the Java 1.4.2 Plugin Settings program, you can adjust the settings for caching. On the "Cache" tab, you can view the cache, clear it, and set how much space you want to reserve for the cache. If you don't mind the performance hit, you can turn on Jar Compression, which will compress the applets you download.
It also would probably be a good idea to clear the Java 1.3.1 cache. In the Java 1.3.1 Plugin Settings program, also in the "Cache" tab (anyone else notice the leftover Jaguar tabs?), you can clear the cache folder with the press of a button.
Mac OS X Hints
http://hints.macworld.com/article.php?story=20040815225320580