Using the 3.03 JBoss/Jetty binary, I defined an entity bean using local interfaces. The bean is then referenced from servlet code using the local home. This works so long as the web-client.xml and jboss-web.xml files reference this bean as if it were a remote bean. Using ejb-local-ref generates this error on deployment:
org.jboss.deployment.DeploymentException: ejb-local-ref: ejb/Program, target not found, add valid ejb-link; - nested throwable: (javax.naming.NamingException: ejb-local-ref: ejb/Program, target not found, add valid ejb-link)

web-client.xml
<ejb-local-ref>
<ejb-ref-name>ejb/Program</ejb-ref-name>
<ejb-ref-type>Entity</ejb-ref-type>
<local-home>road.interfaces.ProgramHome</local-home>
road.interfaces.Program
</ejb-local-ref>
jboss-web.xml
<ejb-local-ref>
<ejb-ref-name>ejb/Program</ejb-ref-name>
<local-jndi-name>ejb/Program</local-jndi-name>
</ejb-local-ref>
jboss.xml

<ejb-name>Program</ejb-name>
<local-jndi-name>ejb/Program</local-jndi-name>


If the web-client.xml snippet is changed to
<ejb-ref>
<ejb-ref-name>ejb/Program</ejb-ref-name>
<ejb-ref-type>Entity</ejb-ref-type>
road.interfaces.ProgramHome
road.interfaces.Program
</ejb-ref>
then the war deploys without error and the beans can be referenced.

(I have a good reason for accessing entity beans from a servlet using local interfaces. This is legal, if unusual)