I've been fighting with a problem recently, which can drive anybody crazy. I suspect the problem stems from the way ExternalCompiler generates the command for javac. On large project with a complex classpath it runs well over 5 KB (see http://intellij.net/forums/thread.jspa?threadID=270426&tstart=0 ) for attachments with more info.
I've tried to create a test project reproducing it, but got very strange results and couldn't nail it down (really need a loooong classpath). So, I figured it could be the problem in latest IDEA builds. So, try this to reproduce (run under JDK 1.4, there's a validation on the build for the correct JDK) and remember it's a large project and will take a while to prepare on a clean machine:
svn co http://svn.codehaus.org/mule/tags/mule-2.0.0-M2/
Open the project and hit compile and watch it. I came to a conclusion it's not any plugin's fault, as even removing half of the default plugins (and all user ones) still give an error.
Needless to say, IDEA became merely useless :((