I have an exploded deployment, but when I change a method while stepping through it,
(not a method signature, just the body), I can stack frames are correctly dropped
and I can step through the changed methods but at the same time WAS restarts
the application. Why does it do it and how would I prevent that? I have -Xj9 specified
in JDK configuration...

I'm not sure what the setting in WAS is, but in Tomcat it's a context setting called "reloadable=true", WAS probably has something similar, you can just turn that setting off.

Do you mean reloadEnabled="true" in deployment.xml of the EAR? I have set this, yes.
(but I think my colleague who did not have this set - does not have that attribute at all
in deployedObject tag of deployment.xml - is running into the same problem).

Moreover, if I don't have it set, how would WAS know to reload classes in the first place?

Again, I have no idea what the setting for WebSphere is, this isn't a MyEclipse issue. So unfortunately asking me if it's the reloadEnabled=true setting, I really have no idea. You'd have to check the WAS docs, sorry.

Looks like it's a matter of having reloadEnabled="true" in deployedObject tag of deployment.xml (or, setting reloading enabled in manual install). Per WebSphere, this actually leads to restart of an app when
new class is detected (http://publib.boulder.ibm.com/infocenter/wasinfo/v5r1//index.jsp?topic=/com.ibm.websphere.nd.doc/info/ae/ae/urun_rapp_inst.html). To avoid that, I removed that, and instead have reloadingEnabled="true" in ibm-web-ext.xmi for the WAR (I don't have EJBs, but similar thing applies). So far so good...

Very cool, thanks for the followup for other folks.