Update: It didn't take long. This vulnerability is now used in the wild. For details, see http://krebsonsecurity.com/2010/04/unpatched-java-exploit-spotted-in-the-wild/

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It looks like Tavis Ormandy posted an interesting "bug" in javaws application to Full Disclosure yesterday. I have yet to verify all the details, but if what Tavis posted is true it opens up a rather interesting scenario for an attacker. (one which Tavis in his PoC code outlines rather well!)  We will try and update this post as more information is discovered.  I have been talking to a few other security researchers who have verified his claims, i have yet to successfully verify his PoC on any of my vms.  (might be version issues)

Tavis's post (full information here)

http://seclists.org/fulldisclosure/2010/Apr/119

Tavis also did an excellent job in not only formatting of his alert, but also in the content (again, i have yet to verify all this my self!). The below is a snippet of the mitigation portion of his alert. 

-------------------
Mitigation
-----------------------

If you believe your users may be affected, you should consider applying one of
the workarounds described below as a matter of urgency.

- Internet Explorer users can be protected by temporarily setting the killbit
  on CAFEEFAC-DEC7-0000-0000-ABCDEFFEDCBA. To the best of my knowledge, the
  deployment toolkit is not in widespread usage and is unlikely to impact end
  users.

- Mozilla Firefox and other NPAPI based browser users can be protected using
  File System ACLs to prevent access to npdeploytk.dll. These ACLs can also be
  managed via GPO.

Detailed documentation on killbits is provided by Microsoft here

http://support.microsoft.com/kb/240797

Domain administrators can deploy killbits and File System ACLs using GPOs, for
more information on Group Policy, see Microsoft's Group Policy site, here

http://technet.microsoft.com/en-us/windowsserver/bb310732.aspx

You may be tempted to kill the HKLM...JNLPFileShellOpenCommand key, but
the author does not believe this is sufficient, as the plugin also provides
enough functionality to install and downgrade JRE installations without
prompting (seriously). However, if none of your affected users are local
Administrators, this solution may work (untested).

As always, if you do not require this feature, consider permanently disabling
it in order to reduce attack surface.