SAS provides their own JRE with each package and uses that to run its java-based components (SMC, OLAP Cube Studio, etc). I'd stick with the SAS-provided JRE for as long as you use a certain SAS version.
For the web services (WRS, StoredprocessServer, etc), SAS relies on a web application server. With SAS 9.2, I had to install jboss, which will basically work with any JRE that's available. You may have to edit the jboss start script to set the correct JAVA_HOME there. The fine thing: if the new JRE causes problems, just reverse the edit in the start script.
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