You can put the whole JRE in a sub directory and just reference java.exe based on the sub directory. This is done quite frequently by other products.
You don't need to set any Environmental variables.
Update
If this is a commercial application that is not a JRE toolkit (i.e. something like Maven or Ant) do not rely on the global Environmental variables JAVA_HOME, PATH or CLASSPATH to be set. If you want to create a batch file that when ran, automatically sets that in the context of your application, that'll work fine. But do not rely on them to be set in the System.
All it will take is for someone to change these to use some version of 1.7, or 1.8 beta, or really any sub-version of the JRE to break your application and then you'll get Customer Support calls about your application breaking, when really what they did was change their JAVA_HOME to something absurd because they misread the Ant documentation.
If you are providing a toolset that works in conjunction with the JDK, such as Ant or Maven, you'll probably want to use whatever JRE/JDK they have installed as that is the point of your tools.