I went through this routine yesterday. Updated Java and restarted Firefox. I can 100% vouch for seeing a warning about Java being outdated. The warning was still there. I stand by it and I wont delete or edit my comment.
As a dedicated Firefox-user who dislikes the direction Chrome is taking, I still say Firefox has a problem here. This is something real users are experiencing.
I believe this as a whole will have a very negative impact on Firefox's perception in the java-heavier regions of the internet.
And damage done is hard to repair. Mozilla should think carefully and very quickly about what they just have done.
Edit: My bank's facebook page is already filling up with customers saying they can't log in. When the bank's reply is "Dont use Firefox. Firefox is broken" and the customer indeed can log in with other browsers, what chance do you think there is for the user going back to Firefox?
Mozilla needs to get 24.1 java-enabled-edition out there now, until it gets its UI/UX story straight.
Edit 2: Down-vote as you like. If you don't think this will affect Firefox's perception, you are a tad more optimistic than I am.
Weird.
It appears to be working as claimed in my Firefox build from yesterday (26.0a2 (2013-10-21)). Most likely a bug then, and should be treated as such, instead of assuming Mozilla is lying about updates being available, or not.
Is there a chance that you have more than one instance of Java installed? I've seen this on a few machines. An up to date copy of Java in "c:\Program Files" and an outdated version still sitting in "c:\Windows". Try about:plugins in the address bar, I think that should list all installed versions.