I don't know exactly how it works, but when a JDK is installed (on Windows at least) there seems to be some sort of "default jdk" setting, and Eclipse apparently honors it. I say this, because when I had my problem after the Oracle install, I noticed that running java from the command line was running a 1.3.1 JDK, and when I looked in the Eclipse prefs, the 1.3.1 from the s:\oracle\blah\blah directory was the one that was selected, instead of the Sun 1.4.2 I had been using.
The Oracle installer is even more of a pain than that. It doesn't just install it's own jdks, but it also changes your path environment variable, putting in it's own JDKs (both a 1.3 and a 1.1). I felt the pain of this not that long ago. The path was modified, even though I had ultimately canceled the Oracle install. Eclipse found and used the 1.3 jdk in the path instead of the 1.4 I had previously selected. Using 1.3 to run eclipse seems to prevent compiling with 1.4, even though it looks like it's allowed -- though I'm not sure if this was an artifact of the path setting or something else on my machine, or if that's always the case.
So if Homesite does something similar, your path environment variable might be another place to look. Right-click on "My Computer", select "Properties", click on the "Advanced" tab, then click on on the "Environment Variables" button. In the lower area of the window in the System variables section you should find Path. You might also check to see if it changed your java_home environment variable (if that is set at all)
--Tim
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