It looks to me as if it is a problem with mysql, and the jdbc driver is telling you, rather than jboss. Is there any indication in a mysql log that it had a problem?
Also, it is doubtful that you really want the pool maxsize < minsize. Especially with these non-xa connections, you need at least as many connections as you can have simultaneous transactions.
I used the older version of JBOSS and driver to avoid problems with the examples I have.
They was developed in a similar environment. I hoped it will be more simple.
I tried the new driver of MySQL (mysql-connector-java-3.0.6-stable) with jboss-3.0.6_tomcat-4.1.18 I got the same problem. There are no other error message in the log.
I installed the new versions:
(Win2K, jboss-3.2.0RC4_tomcat-4.1.18, mysql-connector-java-3.0.6-stable, mysql-4.0.12)
with exact the same configuration and it works.