Investigated this myself -- despite android have 'some java' built in (i.e. dalvik VM) it does't have a VM capable of running a java applet.
One of the big missing things in Dalvik is the class libraries that are part of a normal JVM/JRE/JDK. In particular, it doesn't have awt, and/or swing (class libs used for UI type stuff).
So applets -- nope. Sometime? Maybe ... I think the OpenJDK guys have all the needed class libs making it JDK compatible but not having any proprietary encumberances. Maybe using this, there is a snowball's chance in hell that some enterprising organization or person, could attempt to cobble in some sort of support for more vanilla java stuff; maybe even including applets.
anybody have any other info on this?