I came across an article by Bill Burke on this topic.
http://docs.jboss.org/ejb3/app-server/tutorial/ear/ear.html)http://docs.jboss.org/ejb3/app-server/tutorial/ear/ear.html

"@EJB annotations are usable in servlets and JSPs, but unfortunately, we have 
not yet updated tomcat to support it. Also, Tomcat works with the old XML 
format so you cannot use XML either. So for now, you must lookup the EJB via 
its global JNDI name."

It tells you how to use session bean reference from Servlet which will work 
with JBoss 4.0.x.

I guess <ejb-ref> is for the legacy EJB 2.1 purpose and in 2.1, local & remote 
are mandatory.

However, when I use NetBean 5.5 Beta2 to insert a Enterprise bean reference, it 
does add ejb-ref into web.xml so Sun has to address this issue.

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