I am sorry if I sound like someone from Support, but I was not able to recreate your problem. I used RAD version 8 with a WebSphere Application Server version 7. After profile start the process clearly ran in the specified working directory. I checked it using lsof and an example application. Like Terrell already asked, are you sure about the profile settings?
Two other thing you should consider.
Personally, I would not develop a piece of software that is so dependent on the current working directory as it sounds in your question. I would rather use Java System Property settings to point to a configuration directory or something similiar.
Secondly, if you use RAD with a configured WAS (or Tomcat or whatever) server profile, make sure you check the server specific settings inside RAD (context menu of the profile). For example, per default RAD uses its own deployment path for a server profile when it deploys an application to the respective server.