No, you cannot deploy exploded war(s) to the Jboss cluster. You could either build the war each time as you suggest or you could use non-clustered deployment on a shared file system (e.g. instead of using farm folder, use alternative deploy folder that is shared between server machines).
The issue was reported via http://jira.jboss.com/jira/browse/JBAS-1239
You can vote for the issue to be fixed if you like.
Thanks a lot Scott,
I was reading the link. At the end it says
"One way to solve would be to archive the contents of the exploded directory and farm deploy the archive instead (users can currently do this on their own). "
Does this archive has to be J2EE compliant or I can just make use of folder structure with out WEB-INF directory ?
The archive needs to be J2EE deployable as it normally would need to be (including the WEB-INF).