Here is what I have:
JAVA_HOME=C:\\Software\\Java\\jdk1.5.0_12 (points to JDK 5.0)
In Eclipse \"Installed Runtimes\" I have: jre 1.5.0_12 (points to JRE 5.0)
Eclipse has a list of installed JRE's under window->preferences->java->Installed JRE's. The one selected as the default will be the one included with Eclipse, but you can easily add any other JRE's from this same preference pane, and select any default you wish.
This will be the system wide default, which can be overridden on a project by project basis from the Build Path->Libraries tab. To change, select Add Library->JRE System Library and choose from your configured JRE's. Then remove the library for the default.