This week's book giveaway is in the OO, Patterns, UML and Refactoring forum. We're giving away four copies of Refactoring for Software Design Smells: Managing Technical Debt and have Girish Suryanarayana, Ganesh Samarthyam & Tushar Sharma on-line! See this thread for details.
I realize this is an old thread, but when searching I found a similar question which also had not been answered, and since I just learned about this I thought I might reply so people can find an answer when they search for this
JAVA_TOOL_OPTIONS is an environment variable you can set to pass arguments to the Java Virtual Machine (and apparently also javac). If the variable is set, its content is printed out as mentioned by the OP. So this is no error, just debugging info. It can be used for command line options (like -enableassertions) and also to set system properties (like -Dmyvar=myvalue), which you can then query through System.getProperty().
Its use is for when you have no command line available when starting the JVM, or also starting from scripts.
From a quick test, this works for Java 1.5 and up.