Windows 7. I've done system updates and I've cleared my system's temp folder.
I think I may have sorted it out, but I'm not happy with the solution. I pressed the: "change project to 1.5 compliance" or whatever popup on an error message for one of my projects. That set the JRE to 1.5 and turned on the "enable with project specific settings" checkbox in the project's compiler settings. I then manually set the JRE back to 1.7 and unchecked the "enable with project specific settings" and it is all fine again for every project...
The best I can guess is that Eclipse "forgot" what it was set to, and would only accept my manual changes if it first did its automatic change for some stupid reason. Who knows...Eclipse works in mysterious ways sometimes.