Can we configure a separate log for each application?

There is a restriction in Tomcat 3.2 related to how you declare log files. In Tomcat 4.0 this has been enhanced, letting you declare a separate destination for the servlet log per application, instead of globally. If you need to run under Tomcat 3.2, I suggest that you add some sort of application identifier to the log messages being created. A common pattern creates log files like this:

[Application1] This event happened
[Application2] That other event happened