Great for you, or the customer?*  It sounds a little too
technical for most customers as proposed, but I have
been looking to incorporate a similar end-result in a
generic web start based frame I am developing.

Are the applications trusted?

My approach is to redirect System.out/System.err into
an Object I can control (the size of) and later write out.
OTOH that is only intended to capture the output of other
classes (that are put into the frame) that use System.out/err,
and that possibility is unavavailable to sandboxed apps.

A better strategy though, is to implement logging throughout
the app.  Then you can decide what happens to the information
in the log (and indeed, at what level the log is recording).

Sandboxed apps. can only access anonymous loggers (at
least to add a custom handler), though all-permissions apps.
can get named loggers.

Are they (the applications) being launched using web start?

If so - it offers sandoxed ways to export the data to local disk,
though it might be easier to submit it directly back to a server-side
'bug report' script.

* It'd be even nicer for the user could 'click a button' and after
reviewing the data 'authorize' it to be returned direct to
your server, no?

Assuming the server-side support cannot be provided,
you might look to using the web start based
BasicDocument.showDocument(URL) or the J2SE
based Desktop.mail(URI) with an email address, to
at least prompt the user where to send the report.