What does this change actually do?  It just seems to create a new connection 
and store it in threadlocal when the cacheloader  is constructed, and that's it.

So all it does is store a conn for a particular thread (the one that starts the 
cache).  Other threads will still have to call getConnection() each time with a 
prepare().

Am I missing something, how does this result in being able to deal with 
capacity better?

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