The question is not about the maximum heap size on a 32-bit OS, given that 32-bit OSes have a maximum addressable memory size of 4GB, and that the JVM's max heap size depends on how much contiguous free memory can be reserved.
I'm more interested in knowing the maximum (both theoretical and practically achievable) heap size for a 32-bit JVM running in a 64-bit OS. Basically, I'm looking at answers similar to the figures in a related question on SO.
As to why a 32-bit JVM is used instead of a 64-bit one, the reason is not technical but rather administrative/bureaucratic - it is probably too late to install a 64-bit JVM in the production environment.