SSH tunneling via JSch

a SOCKS proxy setting on jsch allows you to connect to a running proxy server on the remote side. An sshd on the remote side would not be considered a SOCKS proxy. What you will have to do is establish a local port forward to the ssh port on the machine you're tunneling to, then establish a secondary ssh connection to this system using the api.

I've taken your example and slightly rewritten it to accomplish this:

import com.jcraft.jsch.*;
import java.io.*;

public class JschExecutor2 {

    public static void main(String[] args){
        JschExecutor2 t=new JschExecutor2();
        try{
            t.go();
        } catch(Exception ex){
            ex.printStackTrace();
        }
    }

    public void go() throws Exception{

        StringBuilder outputBuffer = new StringBuilder();

        String host="firstsystem"; // First level target
        String user="username";
        String password="firstlevelpassword";
        String tunnelRemoteHost="secondlevelhost"; // The host of the second target
        String secondPassword="targetsystempassword";
        int port=22;


        JSch jsch=new JSch();
        Session session=jsch.getSession(user, host, port);
        session.setPassword(password);
        localUserInfo lui=new localUserInfo();
        session.setUserInfo(lui);
        session.setConfig("StrictHostKeyChecking", "no");
        // create port from 2233 on local system to port 22 on tunnelRemoteHost
        session.setPortForwardingL(2233, tunnelRemoteHost, 22);
        session.connect();
        session.openChannel("direct-tcpip");

        // create a session connected to port 2233 on the local host.
        Session secondSession = jsch.getSession(user, "localhost", 2233);
        secondSession.setPassword(secondPassword);
        secondSession.setUserInfo(lui);
        secondSession.setConfig("StrictHostKeyChecking", "no");

        secondSession.connect(); // now we're connected to the secondary system
        Channel channel=secondSession.openChannel("exec");
        ((ChannelExec)channel).setCommand("hostname");

        channel.setInputStream(null);

        InputStream stdout=channel.getInputStream();

        channel.connect();

        while (true) {
            byte[] tmpArray=new byte[1024];
            while(stdout.available() > 0){
                int i=stdout.read(tmpArray, 0, 1024);
                if(i<0)break;
                outputBuffer.append(new String(tmpArray, 0, i));
             }
            if(channel.isClosed()){
                System.out.println("exit-status: "+channel.getExitStatus());
                break;
             }
        }
        stdout.close();

        channel.disconnect();

        secondSession.disconnect();
        session.disconnect();

        System.out.print(outputBuffer.toString());
    }

  class localUserInfo implements UserInfo{
    String passwd;
    public String getPassword(){ return passwd; }
    public boolean promptYesNo(String str){return true;}
    public String getPassphrase(){ return null; }
    public boolean promptPassphrase(String message){return true; }
    public boolean promptPassword(String message){return true;}
    public void showMessage(String message){}
  }

} 

What this code does is create a local port forwarding to the ssh port on the target system, then connects through it. The running of the hostname command illustrates that it is, indeed, running on the forwarded-to system.