Yes it can. Years ago Eclipse wasn't able to handle nested projects, in which both a folder and a subdirectory of it contained a .project file with the expectation that they would both result in projects on import. Because this didn't fit Maven's view of the world people would put the parent pom in a peer directory--this was called a Flat Project Layout--see the bottom of http://maven.apache.org/plugins/maven-eclipse-plugin/reactor.html.

Nested projects are no longer a problem in Eclipse, and in particular m2eclipse supports them well. I don't see why the two parents (the parent-parent and the peer-parent) shouldn't be merged (into the former) in Infinispan. This particular case is strange since it seems to merge the ideas from nested and flat structures. Not sure why...

-jeff