It is only that intensive because the applet is in a browser window, and has do do some extra processing because of that. Usually, if I set my browser's CPU priority to "Below Normal" or "Low" (in Windows XP), the game runs a lot smoother. I'm sure that the standalone version will run much more smoothly because it will not be in a browser.
Even if i don't get disconnected it starts 2 java.exe's sometimes. But i never thought to end one manually. I know you didn't mean to, but thanks Zuriki for helping with some of my lag. I think a major problem most people have is just graphics. If Notch had more code to decide what to draw, it would use more of my RAM, but would draw faster. I have a Dual-Core proccesor and 2 gig's of RAM, but can only play on the second to lowest render distance because I have integrated graphics.
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Blargha! Blargha! Blargha!
I wouldn't listen to a thing I say. I'm probably insane.