I demo-ed a little proof of concept project based on JBoss running locally on a low-end machine with session EJBs. I was fairly happy with the results, as was the person I was demo-ing to.
This person originally wanted to go with .NET, but .NET isn't even really a product yet. I try not to hate Micrsoft just because they are Microsoft, but I really believe that J2EE is the way to go for our company. We already have an investment in Java, so it makes sense to stick with that investment for a while as long as that investment is doing well.
Here's some perspective on the issue.

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