I checked the j2ee 1.4 specification and in section 8.2 it says:
The Manifest file is named META-INF/MANIFEST.MF in the JAR file. The Class-Path entry in the Manifest file is of the form
The J2EE deployment tools must process all such referenced files when processing a J2EE module. Any deployment descriptors in referenced .jar files are ignored when processing the referencing .jar file.
It seems that JBoss 3.2.3 violates this part of the 1.4 spec.