First I'll ask the question, is there a reason all JVM options are going into JAVA_OPTS instead of being split up to also use CATALINA_OPTS?

The first reason for this is quite simply that Apache designed Tomcat servers this way as evidenced directly in the catalina.sh file.
The second reason is because having the heap settings in JAVA_OPTS while using a VMWare server dedicated strictly for a single JIRA application throws errors about insufficient memory when stopping the JVM.
Since JAVA_OPTS are used on all calls (start, stop, run, debug), when calling for a JVM stop, it's also trying to initialize the heap again. In our scenario, we set-up a dedicated VM server specifically for a large JIRA instance (10gb Heap). It has been scaled accordingly for Server Memory and CPU. Every time we restart the JVM it causes the system to dump a hs_err_pid.log file.
This was never a problem when JIRA was being used on a shared server and the extra memory was available.

In short, with more teams moving to Virtual environments, this will be a problem that will continue grow.

I added a copy of what the setenv.sh file might look like.