It looks like upgrading remoting to remoting-alpha4 fixed the bug.
I will wait an input from Tom to see if this was already fixed.
I though upgrading remoting fixed this...
But we just got a failure on cruisecontrol:
I will keep an eye on cruisecontrol.. and maybe run the test under loop.
The test passes with the remoting head as per Jan 20 2007, so I am closing the issue. For the future, when adding tests directly related to remoting, put them under tests/src/org/jboss/test/thirdparty/remoting