I came upon the same problem and solved it, but now I'm to lazy to put the sources online, still want to make something of it.
But I can point you to the tutorial I found that helped me solve it.
It's for flash, but I think it's very java-convertable http://www.kirupa.com/developer/actionscript/isometric_transforms.htm
Math is your friend, thats what I keep saying everyone, give it a try
btw. the method introduced there is very powerful, because it let you work in 3d space (y = jump) and have everything projected onto 2d plane (screen) and vice-versa (mouse (2d) -> world (3d)). And it's not that complicated at all!