I really like the idea and overall a pretty good implementation for a first go around. GPU Mining support would be a huge plus, but improving the performance of the current CPU mining implementation really needs to be done.
Using your site, my Core2Duo 2.2ghz gets about 660KHash/sec. Using Ufasoft's SSE2 miner, it gets ~5,500KHash/sec. I know that you are using Java and so can't exactly write to the instruction level of the hardware, but there should be some sort of optimizations that can help out at least a little bit.
I'm surprised the difference is that great. On my laptop, dual core 2.2 ghz I get 1700khash/sec using jgarzik's CPU miner, compared to 800-900khash/sec with my miner. Which is a lot less, but not as bad as you have it. There's a similar performance penalty on my desktop, a quad core - the applet is about 40% slower than a C miner.
Unfortunately raw math is one of Java's few weak spots in terms of speed. I'm not sure how much faster I can make it. I'm just happy of the performance compared to a JS miner (I wrote a demo one and was getting more like 5khash/sec vs 850khash/sec with my applet)