I appear to have resolved this issue by changing dialect to MVEL and setting drools.permgenThreshold=0 in META-INF/drools.rulebase.conf. I only stumbled upon this based on some hints in another post and when it didn't work I had to debug the point at which the classes got created and worked back that the permgen threshold was only used by mvel dialect rules. Appalling documentation from a performance and system configuration perspective.
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