You can find my project with the tests here:
https://github.com/CavemanCraig/IssueWithTestsUsingCreateDrop/tags
I created 2 tags, a v0.9 which has persistence.xml specifying value=create which you can use to prove the tests work correctly, and v1.0 which specifies value=create-drop which should work just as well, but doesn't.

The main error that seems to be getting returned is:
Caused by: org.h2.jdbc.JdbcSQLException: Sequence "HIBERNATE_SEQUENCE" not found; SQL statement:
call next value for hibernate_sequence [90036-161]

NOTE: I just thought of something. I am running both in-container and client mode tests in this project. It may be possible that the Hibernate DB is getting setup when the in-container tests start, and then with create-drop, AS7 drops the DB as soon as the in-container tests finish, then causing errors when the client mode tests start to run. This could explain why I don't get the errors when I run with value=create. I'm not sure that's what's happening, and even if it is, I'm not sure if that would be correct behavior or not. If someone could validate this and fix it (if it is a bug), it would be much appreciated.

Thanks a lot.