According the the java plugin development documentation You can use the cache_archive, cache_version and cache_archive_ex parameters to cache your applets and third party libraries.
This is the usage:
<OBJECT .... >
<PARAM NAME="archive" VALUE="a.jar">
<PARAM NAME="cache_archive" VALUE="b.jar, c.jar, d.jar">
<PARAM NAME="cache_version" VALUE="0.0.0.1, 0.0.2A.1, 0.3D.22.FFFE">
<PARAM NAME="cache_archive_ex" VALUE="applet.jar;preload, util.jar;preload;0.9.0.AC1, tools.jar;0.9.8.7F">
</OBJECT>
Also, there is a warning in this page:
.jar files specified with the archive
attribute also get cached in this
sticky cache.
In case this applet caching mechanism
does not work for you, check whether
it has been disabled elsewhere, such
as through the APIs. Make sure you
have not disabled the URLConnection's
caching via the API:
URLConnection.setUseCaches and
URLConnection.SetDefaultUseCaches