I am looking to distribute a VM containing an open source application which uses the JDK? Under their current license (http://www.oracle.com/technetwork/java/javase/readme-142177.html) I am not seeing any trouble with the distribution as I will not be modifying the JDK and it is not a beta release. Is there a license violation with distributing the installed JDK on a VM? Do I need to move to OpenJDK?
As long as it is for personal or in-company use, I don't think there are any license restrictions (not that Oracle is ever going to audit you btw). But I'm an outsider just like you, I can only give my opinion on what I think is the truth - that still doesn't guarantee it is the truth. If you want security then go with OpenJDK; Oracle pushes in that direction themselves by dropping the DLJ.
I think this is a pretty neutral and truthful article on the subject:
Most outings you will find on the net are made by people that have a total inability to look beyond the length of their own nose...