Solution:
Solution for me was to edit Android Studio.app/Contents/Info.plist
Find these two lines towards the bottom:
<key>JVMVersion</key>
<string>1.6*</string>
Change it to 1.7*
, so that it looks like so:
<key>JVMVersion</key>
<string>1.7*</string>
Then restart your IDE.
Explanation:
If you're like me, you were prompted to install Java 6 for your Mac when installing Android Studio (before the RC release) because it required that and I didn't have a runtime installed at the time (clean install). This made this the default runtime for the IDE (even if projects within it are built with JDK 7). It seems with 1.0 RC-1, they raised this to 1.7.
You can check the runtime version it's using by going to Android Studio > About Android Studio.
NOTE: This may require you to revert it the next time you want to update with the patch updater, as someone here reported that the patcher fails if you've edited this file. I think this is really dumb and heavy handed by them, and hopefully they address that issue soon.