I actually tried this and had issues with something… dashes I think? I don't recall now. Also, what kind of jar issues are you having? I have not seen this personally.
If baseDir is a directory within a jar, resolve() does not find any files (the resulting URI contains the filename only). Thus the toURL methods throws an exception. You can try to run TestFireMilk from the jme jars - won't find the texture (jdk1.5/1.6 tested over here). With the changed lines it works. Conceptually we need Locators not Identifiers, so URL should really be fine.
No idea why dashes should be a problem. They work fine over here, as well.
Ok, well if I can't remember then it must not be important… (well, at least that's how it usually works…) if my problem with URLEncoder comes up again, we can handle it then.
ok, committed the fix only, first