Yes, you can do this. I do it quite often.
When you deploy an application, first copy (or ftp) it to a temporary directory on the JBoss host system, and then move the application to the deploy directory. If you try to ftp or copy to the deploy directory directly, the hot deployer might attempt to deploy the application before the copy is complete, resulting in zip file errors.
I do not know how, or if, you can hook up JBoss AS with Eclipse in this scenario. What I usually do is have my Ant or Maven script do the deploy, and I manually start and stop the app server. Also, I do not know if you can debug apps via Eclipse in this scenario.
But can I just access the site url on my lan
Eg. locally I access it as (localhost):8080/portal
Can I just say (machine name):8080/portal
Do I need to open any ports(in XP firewall ) or it will work out of the box with the default install of JBoss on the host machine.
About eclipse I guess I will have to check out .
As long as you can ping the remote host, you can use that name in the url. (Note that JBoss AS 4.2.1 binds to localhost, not to 0.0.0.0 as 4.0.5 does. If you move to 4.2.1, read the readme.html, Configuration Issues.)
You will need to open the ports in the firewall. I opened ports 8080, 1099, 1098, 4444 and 4445 (that was on Linux, on XP I told either ZoneAlarm or Symantec to allow the java app to run as a server, I never use the Windows firewall).