Hey Praveen, sorry for all the confusion!
Knute was correct that I thought CCE would be clear from context, since I had written it out in my previous sentence. It's similar to your use of JLS, which is only written out in your quoted text, but it's still perfectly clear what you mean. BTW (hah!), both are abbreviations, but not acronyms. Yes, those terms are often confused, but it still bugs us poor pedants.
You were also unclear about my last question, but I'm not sure how I can clarify it beyond just reiterating. The casts and the compiler warnings are on lines 5 and 7, but the ClassCastException (aka CCE) happens on line 15, where there is no cast. It's not so much a question as it is an observation of an interesting anomaly -- one that I thought might shed light on my original question.
Now, back to the original question. I think you may have hit on something with that link to the Java Language Specification (JLS), and type erasure. The spec (specification) explains how type erasure is used when a parameterized class isn't bound to a specific type. In my example, that would lead to the erasure of type U throughout the class if it were used in fields, instance methods, and such (though it is not in my example). However, it does appear that the compiler is over-aggressively applying this type erasure to all types in instance-level contexts in the class. IOW (i.e, in other words), for my example, the compiler needs to use type erasure for U, but ends up using it for both U and T. Granted, the spec (specification) doesn't explicitly address what to do in this situation, but that behavior is sufficiently bizarre that I believe it could still be called a bug.