This is done and will be released for next version. Until then download the hsqldb-plugin.jar attached to this case and uncomment the commented xml from embedded-jboss-beans.xml

<!--
<bean class="org.jboss.jdbc.HypersonicDatabase"
name="jboss:service=Hypersonic,database=localDB">
<property name="database">localDB</property>
<property name="inProcessMode">true</property>
<property name="dbDataDir">.</property>
</bean>
-->

<bean name="DefaultDSBootstrap" class="org.jboss.resource.adapter.jdbc.local.LocalTxDataSource">
<property name="driverClass">org.hsqldb.jdbcDriver</property>
<property name="connectionURL">jdbc:hsqldb:.</property>
<!-- <property name="connectionURL">jdbc:hsqldb:./hypersonic/localDB</property> -->
<property name="userName">sa</property>
<property name="jndiName">java:/DefaultDS</property>
<property name="minSize">0</property>
<property name="maxSize">10</property>
<property name="blockingTimeout">1000</property>
<property name="idleTimeout">100000</property>
<property name="transactionManager"><inject bean="TransactionManager"/></property>
<property name="cachedConnectionManager"><inject bean="CachedConnectionManager"/></property>
<property name="initialContextProperties"><inject bean="InitialContextProperties"/></property>
</bean>