I’m not entirely sure why Adobe make it so difficult to update the AIR SDK within Flash Builder 4.7. It’s all the more baffling considering how easy it is to use a different AIR SDK within Flash Professional.
Thankfully Joseph Labrecque has recorded a video showing you how to upgrade Flash Builder 4.7 to use the latest version of the AIR SDK and the new ActionScript compiler. Oh, and if you’re interest in Android development using Adobe AIR then I highly recommend Joseph’s Flash Development for Android Cookbook.