Got it! My colleague discovered this post:
http://www.jboss.org/index.html?module=bb&op=viewtopic&p=3840204#3840204
I put the defaultWebXml attribute into the Context and pointed it to the stock global Tomcat web.xml file. Now Tomcat thinks that /watermarks/ is a real webapp apparently and files are being served out of that directory.
Thanks to everyone for the help and I hope someone else benefits from this thread someday.
Cheers,
-M@
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