I did not get any response to this question in the forum but wanted to share my experience for people who may be facing a similar issue. WebSphereExtendedJTATransactionLookup will not support isolated transaction with its current code since begin method and commit method throws UnsupportedException. Hence in its current format TableHiLoGenerator will not work with WebSphereExtendedJTATransactionLookup.
Intrestingly, Hibernate source code comment says WebSphereTransactionManagerLookup supports version 4, 5.0 and 5.1 and WebSphereExtendedJTATransactionLookup supports version 6.0. There is no mention of Support for Websphere 7.0.
In websphere 7.0 we have been using WebSphereTransactionManagerLookup with table HiLo generator and haven't faced any issue until now. So I think this should work.
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