Batch worked for me.
I came here because I was literally having the same problem, with the same amount of ram being allocated, and the massive lag when that small amount was used up. However, the batch file fixed the problem for me, and I'm so happy! I put the batch file directly into the .techniclauncher folder and set it for 1g. No more issue. =D I hope you figure out why it doesn't work for you. Thanks for posting the link to the batch file, and thank you for the original poster of said batch file.