Read http://wiki.wireshark.org/CaptureSetup/Loopback about sniffing localhost.
In short - you may try to setup your apache on real IP address (your system likely have one besides localhost).
2. Get same headers from java program. See http://www.roseindia.net/java/java-get-example/http-headers.shtml for example.
Make sure to clear deployment cache and enable full trace before you do 1 (run javaws -uninstall or use java control panel).
So I wound up expanding my troubleshooting yesterday and wound up tracking down the actual source of the problem. It's actually a client side issue (in this case, the client and server are on the same machine). For whatever reason, it wont execute the applet. I confirmed this by accessing the page from another machine on my network where it executed the applet perfectly fine.
I do appreciate all of your time and I apologize that I "barked up the wrong tree" so to speak. Thanks again.