Chris,
The first problem is a limit of how flexible hot-code replacement in the VM is. You can change the contents of code blocks, but you cannot change the shape of the class (methods, member variables, etc.). The hot-sync will fail in this regard.
As far as reloading JSP pages that have changed, you might want to check the contents of the deployed files. Chances are MyEclipse is actually deploying them, but Websphere isn’t configured to reload changes to your webapp so it’s just ignoring the new JSP pages. You can probably fix this by logging into the administration console and configuring the settings for your app there in Websphere and tell it to reload the changes.
Lastly, I’m sorry I didn’t catch this before, but WebSphere 5.1 doesn’t support the full JSR-45 spec which is required for JSP debugging. That’s why the breakpoints are not getting hit (the source map comming back to MyEclipse isn’t sufficient to map the source lines to the currently executing code lines in the VM). Another user ask about it here:
http://www.myeclipseide.com/PNphpBB2+file-viewtopic-t-7011-view-next.html