FULL PRODUCT VERSION :
java version "1.7.0-ea"
Java(TM) SE Runtime Environment (build 1.7.0-ea-b131)
Java HotSpot(TM) Client VM (build 21.0-b02, mixed mode)

ADDITIONAL OS VERSION INFORMATION :
Windows Vista 32 bit

A DESCRIPTION OF THE PROBLEM :
Text is antialised badly with these rendering hints:
RenderingHints.KEY_TEXT_ANTIALIASING:
RenderingHints.VALUE_TEXT_ANTIALIAS_ON
and
RenderingHints.KEY_FRACTIONALMETRICS:
RenderingHints.VALUE_FRACTIONALMETRICS_ON

See this comparison with JRE 1.6.0:
http://magicplot.com/jdk7-text-aa.png
- Font with size 10-15 are bad antialized in Java 1.7, the font typeface cannot be seen at all.
- The strange for users difference in 'bold' between sizes 17 and 18.

REGRESSION. Last worked in version 6

STEPS TO FOLLOW TO REPRODUCE THE PROBLEM :
Run the little test below or use this test app:
http://magicplot.com/MPTextTest.jar
http://magicplot.com/MagicPlotTextTest.java

EXPECTED VERSUS ACTUAL BEHAVIOR :
EXPECTED -
Text antialising similar to 1.6.0 for this options is expected.

REPRODUCIBILITY :
This bug can be reproduced always.

---------- BEGIN SOURCE ----------
import java.awt.Color;
import java.awt.Dimension;
import java.awt.Font;
import java.awt.Graphics;
import java.awt.Graphics2D;
import java.awt.HeadlessException;
import java.awt.RenderingHints;
import javax.swing.JFrame;
import javax.swing.JPanel;
import javax.swing.SwingUtilities;

public class FontTextMini extends JFrame
{
  public FontTextMini() throws HeadlessException
  {
    setDefaultCloseOperation(EXIT_ON_CLOSE);

    JPanel textPanel = new JPanel()
    {
      @Override
      protected void paintComponent(Graphics g)
      {
        super.paintComponent(g);
        Graphics2D gr = (Graphics2D) g.create();

        Dimension size = getSize();
        gr.setColor(Color.white);
        gr.fillRect(0, 0, size.width, size.height);
        String text = "The quick brown fox jumps over the lazy dog 1234567890";

        gr.setColor(Color.black);
        gr.setRenderingHint(RenderingHints.KEY_TEXT_ANTIALIASING, RenderingHints.VALUE_TEXT_ANTIALIAS_ON);
        gr.setRenderingHint(RenderingHints.KEY_FRACTIONALMETRICS, RenderingHints.VALUE_FRACTIONALMETRICS_ON);

        int pos = 7;
        for (int fontSize = 4; fontSize <= 25; fontSize++)
        {
          gr.setFont(new Font("Times New Roman", Font.PLAIN, fontSize));
          gr.drawString(fontSize + " " + text, 5, pos);
          pos += fontSize;
        }

        gr.dispose();
      }
    };

    textPanel.setPreferredSize(new Dimension(650, 320));
    getContentPane().add(textPanel);
    pack();
    setSize(getPreferredSize());
  }

  public static void main(String[] args)
  {
    SwingUtilities.invokeLater(new Runnable()
    {
      @Override
      public void run()
      {
        JFrame frame = new FontTextMini();
        frame.setVisible(true);
      }
    });
  }
}
---------- END SOURCE ----------

CUSTOMER SUBMITTED WORKAROUND :
Using of VALUE_TEXT_ANTIALIAS_LCD_HRGB may solve the problem for some applications. But if you need only 'gray' antialiasing no workaround has been found.