Hibernate 3 and Hibernate 4 has some major differences. The differences also require different hibernate tools core version. Because of this plugins should know the used version to provide correct support. The option which says hibernate version to plugins is located inside Console Configuration(if you need to change used version for existing console configuration make a double click on it).
There are JPA Tools wizards: JPA Generate Tables from Entities and Generate Entities from Tables which could work based on the database connection instead of Console Configuration. In this mode it is necessary to set correct Hibernate version:
The dialogs could be found in JPA Project: right click on the project->JPA Tools->Generate...
1) There is no way to say Console Configuration which is automatically created for JPA project which Hibernate version to use. So it is necessary to do it manually after the default creation(if you need to use not 3.5 or earlier hibernate)
2) By default version 3.5 is used which means Hibernate 3.5 or earlier is used.