Okay, I have an answer to my own question. I hope this will help other people experiencing similar problems.

Jythonc is a bat file, thus it runs a series of commands. It you edit the bat file for jython (also a bat file) you will see that it calls "Java". Thus to fix any "Out of Heap Memory" errors simply edit the Jython.bat file and pass "-Xmx128m" and it should be smooth sailing from there. If anyone knows and more details of this feel free to share, the more knowledge the better!

- Morgan