I continue to see the issue of Wrong target message being thrown and the workaround for now is to restart the JBossAS which fixes the issue. EJB 3 RC 9 patch 1 does not do anything to solve this issue (and i found that one of the issues marked as dependent to this issue has been reopened recently). So expect a fix only by early Jan 07. For now reboot is the best bet.
Also i found that you need to have JSE 5.0 only to run your application. Even though the docs say that JDK 1.5+ is supported but you get a strange issue of "Could not dereference object" on deployment of Stateful session beans (see this). So i had to change back from JSE 6.0 to 5.0 in Eclipse.
At one point i really was planning to switch from JBoss to Glassfish :). But for now it seems i am back on track with some workarounds to continue my learning of EJB 3 using JBoss AS.
BTW, Mikalai Zaikin's notes on SCBCD 5.0 exam has a very nice appendix/tutorial (replete with screen caps) for how to develop using JBoss 4.0.5.GA + Eclipse 3.2.1 + WTP 1.5 + JBoss IDE 2.0.0.Beta 2. What's missing is how to use hibernate entity manager JPA implementation for RESOURCE_LOCAL transactions in a JSE standalone application. You will find this documentation useful for this.
If you are planning on using JBoss AS for a green field (from scratch) EJB 3.0 project and Eclipse is your IDE of choice, then you can find the instructions at following URL useful:
Eclipse + JBoss AS + EJB 3.0 setup instructions by Eric Garrido
Starter Skeleton Eclipse Project on JBoss Wiki site