However, I did noticed a small problem. When creating a new dataset, timezone other than the default does not get saved.
To reproduce, go into oozie coordinators editor, select to create a new dataset; set the timezone to say America/New York, save the dataset. What is being saved as timezone is the default "America/Los Angeles". It seems like an UI binding or field mapping error.
Forgot to mention that the updating of timezone does work. So the work around is to leave it as default and go back in to edit the dataset and set the timezone to what you desire. The update does stick.