Thanks for the feedback and advice.
(and thanks for the great update to Java3D!)

It's still version 0 due to rounding error of very small floats

I chose Java3D (old version) because I didn't know anything about 3D in Java, and it just worked out the box, but I'll definitely implement the latest, greatest, best solution as I learn more and discover more documentation.

I've just added plugin support (you can write the plugins in JavaScript), and will create a more cross-platform distribution as soon as I can get a Linux distro to run in Virtual PC

Collada format is quite complex, especially for character animation, but I'll use it as the native format.

To learn Java3D I'm creating a scriptable scene/level creator for Java game developers.
It's free and open source of course.

https://sourceforge.net/projects/atomic3d/



Some features:
Basic 3D scene creation and navigation. There's no reason you can't design a 2D tile-based level in it though.
Written in Java with Java3D
JavaScript enabled
Scriptable scene control / object creation
Scriptable Export - Export your scene using JavaScript function callbacks
Collada import and export (still very much under development, as no Java Collada library I've found works 100% so I have to learn Collada and write new filters)
Basic Obj Import

In planning:
Export Java code directly (for e.g. Java3D demo)
Pixel Shaders
Sunflow renderer integration
Networked "Collab" scene editing
Model skinning
MD5 formats, etc
Behaviours

It's starting to take shape, but probably not too useful yet with the possible exception of the Scripted Export.
But, if you have Eclipse and want to play with it to suggest features for your game levels feel free  
There is a compiled Jar on the Sourceforge page