FULL PRODUCT VERSION :
java version "1.7.0_06"
Java(TM) SE Runtime Environment (build 1.7.0_06-b24)
Java HotSpot(TM) Client VM (build 23.2-b09, mixed mode, sharing)

ADDITIONAL OS VERSION INFORMATION :
Microsoft Windows [Version 6.1.7601]

EXTRA RELEVANT SYSTEM CONFIGURATION :
Nothing unusual. N/A.

A DESCRIPTION OF THE PROBLEM :
Logging levels fine, finer, and finest will not output. Conjecture: Only logging levels info and severe appear to work.

REGRESSION. Last worked in version 6u31

STEPS TO FOLLOW TO REPRODUCE THE PROBLEM :
Insert an entry in logging.properties for a test program; e.g., TestLogging.TestLogging.level=FINEST
Execute the code sequence:
if( logger.isLoggable(Level.FINEST) )
      logger.finest(String.format("Logging level is %s%n", logger.getLevel()));
    else
      logger.info(String.format("Logging is FUBAR and level is %s%n", logger.getLevel()) );
    logger.info(String.format("Logging is totally FUBAR and level is %s%n", logger.getLevel()) );


EXPECTED VERSUS ACTUAL BEHAVIOR :
EXPECTED -
FINEST: Logging level is FINEST
ACTUAL -
INFO: Logging is totally FUBAR and level is FINEST

REPRODUCIBILITY :
This bug can be reproduced always.

---------- BEGIN SOURCE ----------
import java.util.logging.Level;
import java.util.logging.Logger;

/*
 * @author CElliott
 */
public class TestLogging {
  private static Logger logger = Logger.getLogger("TestLogging.TestLogging");
  
  public static void main(String[] args) {
    if( logger.isLoggable(Level.FINEST) )
      logger.finest(String.format("Logging level is %s%n", logger.getLevel()));
    else
      logger.info(String.format("Logging is FUBAR and level is %s%n", logger.getLevel()) );
    logger.info(String.format("Logging is totally FUBAR and level is %s%n", logger.getLevel()) );
  }
}
---------- END SOURCE ----------

CUSTOMER SUBMITTED WORKAROUND :
There is no workaround, except to restrict usage of logging to levels info and severe. BTW, this is the way logging has always worked if Logger logger = Logger.getAnonymousLogger() is used. I am not sure if this is correct.