I got it working by rebuilding my dev. environment.
* Downloaded and installed the current Eclipse IDE JEE distro (3.4.1)
* Downloaded and installed JBoss Tools 3 CR1 from the update sites (I had to uncheck the
JBoss Birt option before the install would work)
* Restarted
Incremental publishing to the JBoss deploy folder is now working correctly.
Thanks for the help.
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