I don't see this.
Have you installed Java 7 support into your eclipse indigo or something ?
There should not be any usage of "non existing JRE's", only execution environments.
The runtime of your server really does not have anything to do with the target JDK of the project.
i.e. you could be targeting Java 5 on a Java 6 server.
...I've seen a few other reports on this and haven't been able to spot the problem on my side...any
chance you can take some screenshots/jing it _?