I found that I have to provide a name attribute for radio inputs to correctly set the default/checked value from the model (controller scope).
Not having name attribute results in name="undefinded@undefined" being inserted by Angular (1.0.0rc3) :
This is contrary to the current docs at:
Seems to be working OK in the AngularJS 1.0.2: http://jsfiddle.net/5KF4c/
Closing. @jsteenkamp feel free to reopen if you still face issues.