I have a Java enterprise application that provides a web service, has a domain layer, and a hibernate persistence layer. In this particular case, there is not a huge differ
I agree that using the same model classes is the right approach. If you are concerned about annotation clutter, you could use a JAXB implementation (such as EclipseLink JAXB) that provides a mechanism for externalizing the metadata:
Also since you are using a JPA model EclipseLink JAXB (MOXy) has extensions for making this easier:
Here is an example of using one model with JAXB & JPA to create a RESTful service: