Paul Fouxson

Two suggestions:
1: Make sure there are no references to the objects you no longer need. For example, if you store a reference in a container, the memory will not be released until there are no more references to a particular object.
2: Once you reset all of the references, invoke:
System.gc() or Runtime.getRuntime().gc(). This should suggest JVM to kick off a garbage collector.

It can do jpeg and gif files. I'm not sure about the tiffs.
You can specify the file in the html file which you use to load the applet.

I did the same thing years ago for a school project.
It is a java applet that performs image convolution with matrices.

http://www.vertexa.com/imageProcessing/index.html

Let me know if this is what you need.