I figured it out. JRE 1.3 stored the properties (Windows) at C:\Documents and Setting\username\.java\properties131_06. JRE 1.4 stores them in C:\Documents and Settings\username\Application Data\Sun\Java\Deployment\deployment.properties.
Here is a programatic way to update the properties that works for both 1.3 and 1.4:
sun.plugin.panel.ConfigurationInfo ci =
new sun.plugin.panel.ConfigurationInfo();
//use this to replace the original values.
String currentParams = ci.getJavaParms();
ci.setJavaParms("-Xms12m -Xmx128m -XX:MinHeapFreeRatio=5 -XX:MaxHeapFreeRatio=10");
try
{
ci.applyChanges();
}
catch (IOException e)
{
e.printStackTrace();
}