Sounds like you are running with the old LinuxThreads library, and not the new Native POSIX Thread Library (NPTL). In LinuxThreads, each thread shows up as its own process (they all report the memeory they share, so they are not each using 128MB of memory). I don't know offhand how to switch to the new library, that would require some research, which I will defer to you. :-)
Oh, I should point out that this is not a JBoss issue nor a Java issue. The library is global to Linux, thus it is an OS issue. That is something you have to change in SUSE. (Or at least that is my understanding.)
Thanks for the tip, the OS thread management could be quite a possible source of the problem. I will check with the folks at Novell/SuSE, and keep you informed about the results.