I agree too, Sun missed the boat big time by ignoring applets for too long, but i reckon theres still a small opening for applets to make a come back.
if enough improvements are made to applets and Java 7 adds native support for things like ogg video (or some other open video format), they could possibly still make a come back, since they still have a relatively large install base, massive developer pool, cross platform technology and java is open source. Wikipedia for example are using Java applets for playing video due to the platform being open and being able to use an open video format example.
Flash and Javascript are still very weak when it comes to many cpu intense and 3d applications, other RIA platforms like Air and Silverlight still need to mature and don’t have the large install bases or mature tech like Java does but they are catching up fast.
Suns done some great work with the consumer jre 6 stuff but will it be enough? i reckon alot will depend on how quickly Java 7 comes out and how much Sun(Orcale?) does to improve the consumer features of the jre.