I am using jxfilewatcher as part of this. It opens file handles to all the file's its watching. Roughly 4300 items in the folder I am working with. With the 10240 limit in OS X, that shouldn't pose a problem for java being able to make sockets...right?
Try testing on an empty or much smaller folder?
Java 7 has nio.2 with a polling WatchService implementation on OS X that you might be able to try instead of jxfilewatcher if I'm understanding what thats doing correctly it's similar functionality.
Not really helpful probably but my trz library below includes a OS X kqueue implementation of a nio.2 WatchService. It passed the basic jvm tests but would probably not do well with 4300 files.
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