When I reverse engineer entities from a database you cannot change the database and reverse engineer different entities.
It would appear reverse engineering entities ties you to one database

To replicate:

Create a Seam project and generate entities as described in http://docs.jboss.org/tools/2.1.0.GA/en/GettingStartedGuide/html_single/index.html#first_seam section 3.5.1

Then select the project and change the database to a different running database by changing the database connection profile in the seam settings. Verify the latest database can be pinged.

Select the project and select File new generate entities and follow the dialogs through until you get to the Generate Entities Dialog. A <couldn't connect to database> error is shown in the database schema window.
i.e. the new database connection is not picked up.

It appears that when the database is changed in the Seam Settings connection profile the hibernate-console.properties are not kept in synch. So when an attempt to reverse engineer the database is tried the old connection settings are used even though they have recently been changed.

If this is a technical limitation then there should be some warning in the docs that changing the database after generating the entities won't work. Plus have the connections profile bit greyed-out so it can't be altered.
But ideally the hibernate-console.properties file should be synchronised with the Seam Settings connection profile.

I tried deleting the hibernate-console.properties to try and force it to create a new hibernate-console.properties file with the correct settings but file but that didn't work either.