FULL PRODUCT VERSION :
java version "1.9.0-ea"
Java(TM) SE Runtime Environment (build 1.9.0-ea-b54)
Java HotSpot(TM) 64-Bit Server VM (build 1.9.0-ea-b54, mixed mode)

A DESCRIPTION OF THE PROBLEM :
When compiling existing Java 7 compatible source code that compiles fine on Java 7 with the recent Java 9 snapshot builds, it fails. This is caused by type deduction for diamonds, which seems to behave different (but only if you compile with -source/target 1.7, all later source/target versions compile fine with java 9).

REGRESSION.  Last worked in version 7u76

ADDITIONAL REGRESSION INFORMATION: 
This code compiles perfectly with Java 7 and Java 8, passing "-source 1.7 -target 1.7"

STEPS TO FOLLOW TO REPRODUCE THE PROBLEM :
Use the following class file:

import java.util.*;

class Bug {
  public static <V> Set<V> copy(final Set<? extends V> set) { 
    return new HashSet<>(set);
  }
}

Code compiles perfectly with Java 7 and Java 8. It also compiles with Java 9 when passing the -source/target 1.8 or 1.9. But with -source/-target 1.7 it fails.

The code also compiles fine with build 47, so it must have been introduced between those builds.

This breaks builds of several open source projects with Java 9. Affected are Apache Lucene and Apache Solr, also Elasticsearch has seen this issue.

The same problems also happens with this code:

import java.util.*;

class Bug {
  public static <V> void copy(final Set<? extends V> set) { 
    Set<V> copy = new HashSet<>(set);
  }
}

It looks like the diamond operator of the HashSet is deducted from the HashSet constructor parameter and not as described by JLS from the left side of the assignment.

EXPECTED VERSUS ACTUAL BEHAVIOR :
EXPECTED -
$ javac -source 1.7 -target 1.7 Bug.java
warning: [options] bootstrap class path not set in conjunction with -source 1.7
1 warning
$
ACTUAL -
$ javac -source 1.7 -target 1.7 Bug.java
warning: [options] bootstrap class path not set in conjunction with -source 1.7
Bug.java:5: error: incompatible types: HashSet<CAP#1> cannot be converted to Set<V>
    return new HashSet<>(set);
           ^
  where V is a type-variable:
    V extends Object declared in method <V>copy(Set<? extends V>)
  where CAP#1 is a fresh type-variable:
    CAP#1 extends V from capture of ? extends V
1 error
1 warning
$

REPRODUCIBILITY :
This bug can be reproduced always.

CUSTOMER SUBMITTED WORKAROUND :
Explicitely insert the type into the diamond: return new HashSet<V>(set);