The fact that I have to change the web-jetty.xml file to the proper, refactored package seems to indicate that the designer of this plugin made it work for Jetty6 so its no surprise it doesn't work for 7.
To reproduce, grab a fresh Jetty 7 download and extract, setup your jetty server in netbeans, create a new java webserver project using the jetty 7 server and click run.
My guess is there are possibly a bunch of issues so a full test of the plugin is really in order (due to the major changes jetty received after moving to the eclipse foundation).
Looks like a duplicate of bug 194137.
*** This bug has been marked as a duplicate of bug 194137 ***