Here is my java15.cmd
SET PATH=e:\programs\jre15\bin;%PATH%
SET CLASSPATH=
set java_home=e:\programs\jre15
SET JAVA2_USERHOME=e:\usr\abwillis

To get Java 1.5,0_07 (the only version that works) to function under OS/2 I installed it under Windows.  I then copied the directory it installed in to my OS/2 system (you see the path above) and then I copied all the executables from my Java 1.4.2_09 installation over the executables in the 1.5 installation (e.g. java.exe, javaw.exe, etc).  I also copied the j2win.dll file over.  Then I use Java 1.5 as I would Java 1.4, with the exception of the plugin which I haven't figured out anything for yet.  This assumes that Java 1.4.2_09 was previously installed as it sets up the registry entries.
Andy