R2 "A supported version of Visual Studio could not"

Forgive me if I am misunderstanding something, but by R2 I should not be needing a Visual Studio at all, just the SQL 12 Report Builder (30 megs as opposed to several gigs), which is installed automatically?

It IS installed, I can start it from the start menu, but still get the above error message from View / Layout which means it is not used.

This is a Windows 7 laptop, with Powershell 3 installed and with that the OS is quite up to date.

EDIT: found it in Rene Gayers blog that I am supposed to turn it on in Tools / Options. Now it works. Oida!!!

This looks like a good way to learn RDLC repors. Fast, simple, overseeable.

But does anyone know why is the dataset still flat in R206, why don't I see the dataset hierarchy? I postponed learning RDLC in 2009 because I did not want to use the "flattened" data sets, I expected things to be properly hierarchical now, header and lines?

EDIT2 created a new report, clearly hierarchical, header and lines, dataset still flat. Maybe it is a limitation in Report Builder?