useage of source:

<mode:source jcr:name="sourceRepo"
mode:classname="org.modeshape.connector.store.jpa.JpaSource"
mode:description="The database store for our content"
mode:dataSourceJndiName="jdbc/mode"
mode:defaultWorkspaceName="default"
mode:dialect="org.hibernate.dialect.MySQLInnoDBDialect"
mode:autoGenerateSchema="create">

partially fails according to logs:

...
[#|2011-06-07T12:18:45.863+0200|INFO|glassfish3.1|javax.enterprise.system.std.com.sun.enterprise.server.logging|_ThreadID=54;_ThreadName=Thread-2;|INFO - taSourceConnectionProvider - Using provided datasource|#]
[#|2011-06-07T12:18:45.863+0200|INFO|glassfish3.1|javax.enterprise.system.std.com.sun.enterprise.server.logging|_ThreadID=54;_ThreadName=Thread-2;|INFO - SettingsFactory - RDBMS: MySQL, version: 5.1.50|#]
[#|2011-06-07T12:18:45.863+0200|INFO|glassfish3.1|javax.enterprise.system.std.com.sun.enterprise.server.logging|_ThreadID=54;_ThreadName=Thread-2;|INFO - SettingsFactory - JDBC driver: MySQL-AB JDBC Driver, version: mysql-connector-java-5.1.15 ( Revision: ${bzr.revision-id} )|#]
[#|2011-06-07T12:18:45.863+0200|INFO|glassfish3.1|javax.enterprise.system.std.com.sun.enterprise.server.logging|_ThreadID=54;_ThreadName=Thread-2;|INFO - Dialect - Using dialect: org.hibernate.dialect.MySQLInnoDBDialect|#]
[#|2011-06-07T12:18:45.864+0200|INFO|glassfish3.1|javax.enterprise.system.std.com.sun.enterprise.server.logging|_ThreadID=54;_ThreadName=Thread-2;|INFO - TransactionFactoryFactory - Transaction strategy: org.hibernate.transaction.JDBCTransactionFactory|#]
[#|2011-06-07T12:18:45.864+0200|INFO|glassfish3.1|javax.enterprise.system.std.com.sun.enterprise.server.logging|_ThreadID=54;_ThreadName=Thread-2;|INFO - actionManagerLookupFactory - No TransactionManagerLookup configured (in JTA environment, use of read-write or transactional second-level cache is not recommended)|#]

...

[#|2011-06-07T12:18:45.960+0200|INFO|glassfish3.1|javax.enterprise.system.std.com.sun.enterprise.server.logging|_ThreadID=54;_ThreadName=Thread-2;|INFO - SchemaExport - Running hbm2ddl schema export|#]
[#|2011-06-07T12:18:45.960+0200|INFO|glassfish3.1|javax.enterprise.system.std.com.sun.enterprise.server.logging|_ThreadID=54;_ThreadName=Thread-2;|INFO - SchemaExport - exporting generated schema to database|#]
[#|2011-06-07T12:18:47.298+0200|INFO|glassfish3.1|javax.enterprise.system.std.com.sun.enterprise.server.logging|_ThreadID=54;_ThreadName=Thread-2;|ERROR - SchemaExport - Unsuccessful: create index NS_URI_INX on DNA_NAMESPACES (URI)|#]
[#|2011-06-07T12:18:47.298+0200|INFO|glassfish3.1|javax.enterprise.system.std.com.sun.enterprise.server.logging|_ThreadID=54;_ThreadName=Thread-2;|ERROR - SchemaExport - BLOB/TEXT column 'URI' used in key specification without a key length|#]
[#|2011-06-07T12:18:47.534+0200|INFO|glassfish3.1|javax.enterprise.system.std.com.sun.enterprise.server.logging|_ThreadID=54;_ThreadName=Thread-2;|ERROR - SchemaExport - Unsuccessful: create index CHILDNAME_INX on MODE_SIMPLE_NODE (WORKSPACE_ID, PARENT_ID, CHILD_NAME_NS_ID, CHILD_NAME_LOCAL, SNS_INDEX)|#]
[#|2011-06-07T12:18:47.534+0200|INFO|glassfish3.1|javax.enterprise.system.std.com.sun.enterprise.server.logging|_ThreadID=54;_ThreadName=Thread-2;|ERROR - SchemaExport - BLOB/TEXT column 'CHILD_NAME_LOCAL' used in key specification without a key length|#]
INFO - SchemaExport - schema export complete|#]
...

this results in ERRORs in log and bad performance as necessary indexes are not created; The system however is running fine beside performance;

NOTE: As noted below in the comments, the problem stems from improper configuration, and now involves improving our documentation with a direct link to the Hibernate dialects.