How can I use a local DTD to validate ejb-jar.xml instead of going to SUN's server as specified in DOCTYPE element?

You can do this by specifying a local DTD-file in the SYSTEM property of the DOCTYPE element. Here is an example:

If your DTD was located inside a localfolder - "C:/localdtd" then your DOCTYPE element should be as follows:

<!DOCTYPE ejb-jar SYSTEM "file:C:/localdtd/ejb-jar.dtd">