The module mechanism (bootstrapping, reloading of classes) is only done on startup of Magnolia (ignoring the deployment tools).

Maybe it is an idea to use an OSGi container (like Felix) in which to run the Magnolia modules. The advantage is that you could update modules on the fly without having to restart your application server. Of course you would still need to think about bootstrapping JCR data.

GX WebManager, a leading Dutch CMS, uses OSGi for their module mechanism (called "WCB's", WebManager Component Bundles). This works very nicely.

They have a community edition out but it is not an open source product..