Regression in handling of python.pythonPath config setting

[breathe]

Environment data

VS Code version: Version 1.20.0 (1.20.0)
Python Extension version: latest (2018.1)
Python Version: Python 3.6.3 | packaged by conda-forge
OS and version: macOS Sierra 10.12.6

Actual behavior

When commented out pythonPath (with environment variable in declaration) is used:

  // "python.pythonPath": "${env:HOME}/anaconda3/envs/ai_services/bin/python",
  "python.pythonPath": "/Users/bcohen/anaconda3/envs/ai_services/bin/python",

Starting debugging fails with:

Failed to launch the Python Process, please validate the path '${env:HOME}/anaconda3/envs/ai_services/bin/python'

The version without the environment variable resolution works as expected

Expected behavior

First version would work as well

Steps to reproduce:

• use an environment variable in python.pythonPath setting

[DonJayamanne]

Duplicate of #691
Upstream issue microsoft/vscode#43303