Follow up info
If I set the / directory so that the jboss user has write access - then compilation is OK. So - it is trying to write to the / directory. However - this isn't something we can live with :-(
Second - the jboss-3.2.3RC1-jetty-4.2.14 package does _not_ exhibit this problem!
Well - sort of a solution
It appears that jboss+jetty does not like running under a symlink.
I maintain /local/jbossnnn with two or three installs (3.0.6, 3.0.7, 3.2.3). And I then symlink /local/jboss to them.
With 3.2.3 (and only 3.2.3) this causes a compilation error where it tries to create temp files in /