Just about everyone these days has an internet connection anyway.
Talking about mass market - this is not really true. At least MANY people have slow lines. For them, it is really annoying to fetch a multi-MB-package.
If the people refuse to update, bad luck. If they didn't read the readme file, also bad luck.
If someone wants to run your software, they will update.
This is definately NOT TRUE when talking about the casual games market, where most Java games reside. If you really NEED a broad audience (for your revenue/copy is small), don't force them to do ANYTHING. For games, there is no real NEED to use a certain one, and a similar game is nearby very often.
Casual gamers need to click on the applet and play. They'll refuse to install anything at all. They just don't care what Java is and what it does. And for sure they don't go over to the Sun site, accept license agreements, choose a proper JRE package, download it, install it, and then come back to your game. An automatic check-and-update-feature with a single mouseclick - that would help there VERY much!
If your game is OUTSTANDING (due to the use of latest Java features) - then you can try to make them install a new JVM.