I wasn't aware Java for OSX was developed at SUN, I was under the impression it was a mac dev team. But that's from my own ignorance. However, it is well known amongst the LW devs and beta testers that Java on OSX has always been below par compared to other OS's. And if you check java history of releases for mac, you will find some were a bit buggy for one reason or another. But then it's not a simple issue, since it needs to tie in with the system, etc.
Would like to see Stief's input here, since I am less involved in betas than I used to be.
The change in location of download prefs for the beta is an interesting one. Makes one wonder that if you delete your LW prefs folder, you may also be deleting your download prefs which doesn't sound good. For windows new version LW, they changed the download location, which has confused many people who couldn't find their downloads ... like you, but of course different reason.