Ok, found out why. The default-lorsm template was serving xml files required by my applet not properly.
1. ad_html_text_convert didn't allow text/xml..so this had to get fixed. I will commit that to cvs
2. default-lorsm.tcl needed a little tuning:
} elseif { [string equal "text/xml" $content(mime_type)]} {
cr_write_content -revision_id $content(revision_id)
}
Now everything works just perfect.