In java's web site i.e. java.sun.com, u'll find an application called HTMLConverter. Download it. Now convert your html file into another html file using this HTMLConverter. It converts applet into objects (changes only the code of the Html file, not the java class file) and adds a plugin checker, so that whenever u run the html file, it checks for plugin. If its not there, it'll get from the java's site and bingo, ur applet will RUN.
Alternately, you may compile the applet specifically under JRE 1.1 conditions like this -