I have exactly the same problem.
What is JBoss doing when I uncomment the <valid-connection-checker-class-name>?
I think JBoss is checking the connection before handing the connection to the application with the sql I configure also.
If the SQL isn't succeddful I expect a exeption in server.log, right?
For Oracle, it is using the pingDatabase method to check if the database is available. You could see either a warning or a SQL exception in the log file if the ping fails. Look at the following files in the source:
connector/src/main/org/jboss/resource/adapter/jdbc/BaseWrapperManagedConnection.java (the checkValid method)