JBoss AS 7 requires authentication for unsecured @WebMethod

• • • Not sure about component or affect versions, please excuse ***

Have a simple EJB3 Endpoint with 3 methods, one unannotated, another annotated @PermitAll and the other one annotated @RolesAllowed. Using security domain "other" with 2 users, details shown below. JBoss returns 401 when the unannotated/unsecured method is invoked without proper authorization. It shouldn't care about authentication or authorization for the unannotated/unsecured method.
Attached with the forum post is a project that demonstrates the problem. The post started of on an incorrect understanding but ends with the correct one so please read it fully before commenting.

1. application-users.properties #
2. is for illustration only and does not correspond to a usable password.
   #
   #admin=2a0923285184943425d1f53ddd58ec7a
   user=8544a03c79aee5b1c99458d83ee0f9e0
   guest=1bb6b7c18b5c1dab17f5141fa398905a

1. application-roles.properties #
   #
   #admin=PowerUser,BillingAdmin,
   #guest=guest
   user=AppUser
   guest=AppGuest