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For development and testing purposes I'd like to deploy my webapp from within eclipse to a remote tomcat server. Is this possible ?
The Tomcat support in WTP only works with a local Tomcat. That said, there is a tomcat deployer plugin that can be used to deploy to a remote tomcat (never tested personally).
If not, how should I set up my development environment for smooth and easy remote deployment ?
If you don't like the plugin, then you could use build tools like Ant or Maven, they have good support for remote deployment trough the manager application as pointed out by Chris. I'd just add Cargo to the list (Tomcat remote deployment is only available with the Maven 2 plugin though).
Actually, using a build tool would be a good idea regardless of Eclipse capabilities in my opinion.