Thanks for the reply. That bug sounds correct. I retested the example against JBoss 4.2.3 like the readme suggested and it worked ok. I'm not using EAP. Being new to Seam I followed the tutorials and cheat sheets. Essentially, build project, Make Deployable then Run.
What does not seem to make sense is that the bug fix applied to 4.3 mentioned here: https://jira.jboss.org/browse/JBPAPP-4316.