For an update of this question - see below.
I experience a (reproducible, at least for me) JVM crash (not an OutOf
2GB on 32-bit JVM on Windows is incorrect. https://blogs.sap.com/2019/10/07/does-32-bit-or-64-bit-jvm-matter-anymore/
Since you are on Windows-XP you are stuck with a 32 bit JVM.
The max heap is 1.5GB on 32 bit VM on Windows. You are at 1412MB to begin with without threads. Did you try decreasing the swap stack size -Xss, and have you tried eliminating the PermSize allocated initially: -XX:PermSize=128m? Sounds like this is an eclipse problem, not a memory-problem per-se.
Can you move to a newer JVM or different (64-bit) JVM on a different machine? Even if you are targeting windows-XP there is no reason to develop on it, unless you HAVE to. Eclipse can run, debug and deploy code on remote machines easily.
Eclipse's JVM can be different then the JVM of things you run in or with eclipse. Eclipse is a memory pig. You can eliminate unnecessary eclipse plug-ins to use less eclipse memory, it comes with things out of the box you probably don't need or want.
Try to null out references (to eliminate circularly un-collectible GC objects), re-use allocated memory, use singletons, and profile your memory usage to eliminate unnecessary objects, references and allocations. Additional tips: