Hi all,
I have a similar software configuration to yours (Mac OS 9.0.4, MRJ 2.2.3, Communicator 4.7.6, MRJPlugin 1.0b2), and the 'Use Java plug-in' box is enabled in my Communicator. My hardware configuration is an older beige PowerMac G3 266/128MB RAM/129MB VM.
A few possibilities come to mind, although I guess that you may have already ruled them out:- a low-memory situation in Communicator; a conflict of some kind among your system extensions; or, a mildly corrupted download of the plug-in.
But first, when you choose the 'Apple|About Plug-ins...' menu item in Communicator, does the MRJPlugin show up at all as having been loaded?
Regards,
--Paul