Getting the octave-forge java package (v1.2.9) to install on OS X Lion. See below for instructions and more information.

configure.diff

--- /tmp/java/src/configure        2012-07-25 11:34:49.000000000 -0500
+++ configure	2013-04-21 22:56:40.000000000 -0500
@@ -1,4 +1,4 @@
-#! /bin/sh
+#! /bin/bash
 # Guess values for system-dependent variables and create Makefiles.
 # Generated by GNU Autoconf 2.65.
 #
@@ -3252,9 +3252,10 @@
   java_version=`$JAVA -version 2>&1 | sed -n -e 's/^java version[^0-9"]*"\([^"]*\)"/\1/p'`
   { $as_echo "$as_me:${as_lineno-$LINENO}: result: $java_version" >&5
 $as_echo "$java_version" >&6; }
-  java_major=`echo -n $java_version | sed -e 's/^\([0-9][0-9]*\)\.\([0-9][0-9]*\)\..*$/\1/'`
-  java_minor=`echo -n $java_version | sed -e 's/^\([0-9][0-9]*\)\.\([0-9][0-9]*\)\..*$/\2/'`
-  if test $java_major -ge 1 -a $java_minor -ge 5; then
+  java_major=`echo $java_version | sed -e 's/^\([0-9][0-9]*\)\.\([0-9][0-9]*\)\..*$/\1/'`
+  java_minor=`echo $java_version | sed -e 's/^\([0-9][0-9]*\)\.\([0-9][0-9]*\)\..*$/\2/'`
+  echo -n major "$java_major" minor "$java_minor"
+  if test "$java_major" -ge 1 -a "$java_minor" -ge 5; then
     case "$canonical_host_type" in
       *-msdosmsvc*)
         HAVE_JAVA=yes
@@ -3271,11 +3272,11 @@
             LFLAGS="$LFLAGS -framework JavaVM"
             JAVA_TEMP="/System/Library/Frameworks/JavaVM.framework"
             JAVA_HOME="${JAVA_TEMP}/Home"
-            JAVA_ARCH="${JAVA_TEMP}/Libraries/libjvm_compat.dylib"
+            JAVA_ARCH="${JAVA_TEMP}/Libraries/libjvm.dylib"
             # According to:
             #   http://developer.apple.com/unix/crossplatform.html
             # you need to explicitely set the include path
-            JAVA_INCS="-I${JAVA_HOME}/include"
+            export JAVA_INCS="-I${JAVA_TEMP}/Headers/"
             HAVE_JAVA=yes
           # This is the Debian default path
           elif test -d "/usr/lib/jvm/default-java"; then
@@ -3311,7 +3312,7 @@
               JAVA_INCS="-I${JAVA_HOME}/include -I${JAVA_HOME}/include/win32"
               ;;
             *)
-              JAVA_INCS="-I${JAVA_HOME}/include -I${JAVA_HOME}/include/linux"
+              #JAVA_INCS="-I${JAVA_HOME}/include -I${JAVA_HOME}/include/linux"
               ;;
           esac
         fi

1. Download and extract the archive (available at http://octave.sourceforge.net/java/)
2. Remove the pre_install.m file
3. Apply this patch to src/configure
4. Recreate the archive (tar -czf java.tar.gz java/)
5. In octave, type pkg install -verbose path/to/archive

Do not set JAVA_HOME.

To the maintainers:
This is a hack, but it fixes it for me on OSX Lion. Clearly the installation was not tested on OSX for this version.
Changing to /bin/bash is necessary because for some reason echo does not see '-n' as a flag and instead prints it when /bin/sh is used.
Other changes are just changes to paths that may have changed in newer versions of OSX. Then the last line is disabling some code that assumes either windows or linux as a platform.