It does not connect via local option. Below is the error we get:

Aug 24, 2012 5:14:59 PM org.xnio.Xnio <clinit>
INFO: XNIO Version 3.0.4.GA-redhat-1
Aug 24, 2012 5:14:59 PM org.xnio.nio.NioXnio <clinit>
INFO: XNIO NIO Implementation Version 3.0.4.GA-redhat-1
Aug 24, 2012 5:14:59 PM org.jboss.remoting3.EndpointImpl <clinit>
INFO: JBoss Remoting version 3.2.8.GA-redhat-1
Aug 24, 2012 5:14:59 PM org.jboss.remoting3.remote.RemoteConnection handleException
ERROR: JBREM000200: Remote connection failed: javax.security.sasl.SaslException: Cannot get password [Caused by javax.security.sasl.SaslException: No username supplied.]
Exception in thread "AWT-EventQueue-0" java.lang.RuntimeException: Error connecting to JBoss AS.
at org.jboss.as.cli.gui.JConsoleCLIPlugin.getTabs(JConsoleCLIPlugin.java:79)
at sun.tools.jconsole.VMPanel.createPluginTabs(VMPanel.java:641)
at sun.tools.jconsole.VMPanel.propertyChange(VMPanel.java:315)
at java.beans.PropertyChangeSupport.firePropertyChange(PropertyChangeSupport.java:339)
at javax.swing.event.SwingPropertyChangeSupport.firePropertyChange(SwingPropertyChangeSupport.java:75)
at javax.swing.event.SwingPropertyChangeSupport$1.run(SwingPropertyChangeSupport.java:80)
at java.awt.event.InvocationEvent.dispatch(InvocationEvent.java:209)
at java.awt.EventQueue.dispatchEventImpl(EventQueue.java:646)
at java.awt.EventQueue.access$000(EventQueue.java:84)
at java.awt.EventQueue$1.run(EventQueue.java:607)
at java.awt.EventQueue$1.run(EventQueue.java:605)
at java.security.AccessController.doPrivileged(Native Method)
at java.security.AccessControlContext$1.doIntersectionPrivilege(AccessControlContext.java:87)
at java.awt.EventQueue.dispatchEvent(EventQueue.java:616)
at java.awt.EventDispatchThread.pumpOneEventForFilters(EventDispatchThread.java:269)
at java.awt.EventDispatchThread.pumpEventsForFilter(EventDispatchThread.java:184)
at java.awt.EventDispatchThread.pumpEventsForHierarchy(EventDispatchThread.java:174)
at java.awt.EventDispatchThread.pumpEvents(EventDispatchThread.java:169)
at java.awt.EventDispatchThread.pumpEvents(EventDispatchThread.java:161)
at java.awt.EventDispatchThread.run(EventDispatchThread.java:122)
Caused by: java.lang.NullPointerException
at org.jboss.as.cli.gui.JConsoleCLIPlugin.connectCommandContext(JConsoleCLIPlugin.java:108)
at org.jboss.as.cli.gui.JConsoleCLIPlugin.getTabs(JConsoleCLIPlugin.java:76)
... 19 more
PipeListener(System.out).run: java.io.IOException: Pipe broken

To get rid of above, we have to connect to locally running jboss server with remote option and providing url, username and password.