FULL PRODUCT VERSION :
java version  " 1.7.0_21 " 
Java(TM) SE Runtime Environment (build 1.7.0_21-b11)
Java HotSpot(TM) 64-Bit Server VM (build 23.21-b01, mixed mode)

ADDITIONAL OS VERSION INFORMATION :
Windows 7 64Bit SP1

A DESCRIPTION OF THE PROBLEM :
In JRE 1.6.45 (latest tested) it was possible to use some variables in the  " deployment.properties "  file like:
deployment.user.cachedir=$USER_HOME\\cache\\6.45
deployment.system.cachedir=$JAVA_HOME\\cache

in JRE 1.7.xx is not possible to use at leas the most important $USER_HOME variable.

REGRESSION.  Last worked in version 7u21

STEPS TO FOLLOW TO REPRODUCE THE PROBLEM :
create the deployment.config / deployment.properties
add following line: deployment.user.cachedir=$USER_HOME\\cache

open the java CPL and check the General -> Temporary Internet File -> Settings
See the Locations Path.....

EXPECTED VERSUS ACTUAL BEHAVIOR :
EXPECTED -
Location Path should be:

C:\Users\TestUser1\AppData\LocalLow\Sun\Java\Deployment\cache


ACTUAL -
Location Path is: $USER_HOME\cache

wich is wrong!

ERROR MESSAGES/STACK TRACES THAT OCCUR :
The first benefit of using this variable was to configure different user-java caches for multible JRE installations on our system.

But the biggest problem is when users have roaming profiles and  they login for some resons with a differnt profile name like  " TestUser1.Domain " 

That means the original installation of Java was here:

C:\Users\TestUser1\AppData\LocalLow\Sun\Java\Deployment\cache

Now the user path is something like this:

C:\Users\TestUser1.Domain\AppData\LocalLow\Sun\Java\Deployment\cache

but Java is not able to detect that and is looking in a path which dosen't exist
(C:\Users\TestUser1\AppData\LocalLow\Sun\Java\Deployment\cache)
which causes of cause some trouble starting some Java-Apps

REPRODUCIBILITY :
This bug can be reproduced always.

CUSTOMER SUBMITTED WORKAROUND :
Make the $USER_HOME variable working again or implement a propper
java home detection!