You're mixing maven plugin elements with JRebel elements. rebel.xml should only contain JRebel information otherwise JRebel will ignore elements is does not understand at runtime. The configuration tag is a maven plugin element and should be removed. The eclipse error states the JRebel elements which the schema accepts are name, module, deployment, version, "http://www.zeroturnaround.com":classpath, "http:// www.zeroturnaround.com":web and "http://www.zeroturnaround.com":war. These are the only elements you can use under the root application tag.
HTH -- Simon (ZeroTurnaround Tech Evangelist) @sjmaple