I\'m using Tomcat 7 on Eclipse Juno. I use workspace metadata as server location (Please see my tomcat configurations below).
In {workspace}/Servers you will find a folder for every Tomcat configuration, containing several configuration files, including the server.xml. There you then can edit the file directly.
To get changes taken into account restart Eclipse. That is imho better than removing and adding the configuration back all the time. Tested using Eclipse Mars and Tomcat 7.
(the solution is from: Eclipse with tomcat - eclipse modifies server.xml)