Server fails to start if JAVA_HOME is not set

If I there is no JAVA_HOME I see the following error and more importantly - the server freezes and can not be stopped unlesss I manually kill -9 the process. Same happens on HEAD.

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JBoss Bootstrap Environment

JBOSS_HOME: /Users/vladimirralev/Downloads/jboss-7.0.0.Alpha1

JAVA: java

JAVA_OPTS:

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Cannot run Java in 64 bit mode. Continuing in 32 bit mode.
16:22:08,757 INFO [org.jboss.modules] (main) JBoss Modules version 1.0.0.Beta11
16:22:09,203 INFO [org.jboss.as.process.Server Manager.status] (main) Starting process 'Server Manager'
[Server Manager] Cannot run Java in 64 bit mode. Continuing in 32 bit mode.
[Server Manager] 16:22:09,589 INFO [org.jboss.modules] (main) JBoss Modules version 1.0.0.Beta11
[Server Manager] 16:22:10,258 INFO [org.jboss.as.domain.controller] (Thread-3) Starting Domain Controller
[Server Manager] 16:22:10,322 INFO [org.jboss.as.domain.controller] (Thread-3) Parsing Domain Configuration
[Server Manager] 16:22:11,165 INFO [org.jboss.as.server.manager] (Thread-3) Starting server server-three
16:22:11,260 INFO [org.jboss.as.process.Server:server-three.status] (pool-2-thread-2) Starting process 'Server:server-three'
16:22:11,279 ERROR [org.jboss.as.process.Server:server-three.status] (pool-2-thread-2) Failed to start process 'Server:server-three': java.io.IOException: Cannot run program "/Users/vladimirralev/Downloads/jboss-7.0.0.Alpha1/java" (in directory "/Users/vladimirralev/Downloads/jboss-7.0.0.Alpha1"): error=2, No such file or directory
at java.lang.ProcessBuilder.start(ProcessBuilder.java:460) [:1.6.0_22]
at org.jboss.as.process.ManagedProcess.doStart(ManagedProcess.java:151)
at org.jboss.as.process.ManagedProcess.start(ManagedProcess.java:129)
at org.jboss.as.process.ProcessManager.startProcess(ProcessManager.java:143)
at org.jboss.as.process.ProcessManagerServerHandler$InitMessageHandler$ConnectedMessageHandler.handleMessage(ProcessManagerServerHandler.java:160)
at org.jboss.as.protocol.ConnectionImpl.safeHandleMessage(ConnectionImpl.java:239)
at org.jboss.as.protocol.ConnectionImpl$1$1.run(ConnectionImpl.java:198)
at java.util.concurrent.ThreadPoolExecutor$Worker.runTask(ThreadPoolExecutor.java:886) [:1.6.0_22]
at java.util.concurrent.ThreadPoolExecutor$Worker.run(ThreadPoolExecutor.java:908) [:1.6.0_22]
at java.lang.Thread.run(Thread.java:680) [:1.6.0_22]
Caused by: java.io.IOException: error=2, No such file or directory
at java.lang.UNIXProcess.forkAndExec(Native Method) [:1.6.0_22]
at java.lang.UNIXProcess.<init>(UNIXProcess.java:53) [:1.6.0_22]
at java.lang.ProcessImpl.start(ProcessImpl.java:91) [:1.6.0_22]
at java.lang.ProcessBuilder.start(ProcessBuilder.java:453) [:1.6.0_22]
... 9 more