I have increased the perm size to 128m and my report generation now works (for how long im not sure...)
I have modified the JAVA_OPTS parameter in my run.conf file to read as follows.
JAVA_OPTS="-XX:MaxPermSize=128m -Xms128m -Xmx512m -Dsun.rmi.dgc.client.gcInterval=3600000 -Dsun.rmi.dgc.server.gcInterval=3600000"
Id still be interested to find out if Sun Java 6 is ok with this version of JBoss
Yes, you can use JDK 6 with AS 4.2.2. What you did is the correct solution to the permgen issue - having done some Grails work myself I know that Grails uses a lot of permgen space.