I was reading the guide at
http://doc.orbeon.com/xml-platform/resources/external-resources.html but it doesn't mention how to do it with JBoss AS 6.1 (the old version, not the EAP6 version).
It turns out it is quite simple in my case as the use of java system property variables is supported in the web.xml file. Since I already have to use a customised web.xml for our orbeon war to setup the login security settings, adding the following values is no problem and we just need a system property setting on startup of the appserver.
So I added the following to the top of the orbeon war web.xml file and I can now put my configuration-local.xml file in an external location with the rest of our application configuration.
<context-param>
<param-name>oxf.resources.priority.0</param-name>
<param-value>org.orbeon.oxf.resources.FilesystemResourceManagerFactory</param-value>
</context-param>
<context-param>
<param-name>oxf.resources.priority.0.oxf.resources.filesystem.sandbox-directory</param-name>
<param-value>${web.app.data}/orbeon</param-value>
</context-param>
It might be worth adding this to the above documentation which doesn't include a jboss section. No idea if this works for JBoss 7 or later but will find out soon.