I don't know why <pass-by-reference> did not work. Looking at the method names in the stacktrace it seems it tried to copy data anyway. I'm sure Ken can confirm whether this is correct and explain what is happening in more detail.
The sun-application.xml you showed looks fine to me. I assume you don't have <pass-by-reference> set to false in your sun-ejb-jar.xml. Could you attach a small EAR to reproduce the error?
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