This week's giveaway is in the EJB and other Java EE Technologies forum. We're giving away four copies of EJB 3 in Action and have Debu Panda, Reza Rahman, Ryan Cuprak, and Michael Remijan on-line! See this thread for details.
The container reads the web.xml at startup. (it might also do it when the web.xml file is modified, but that's container dependant). It won't check it for every request. That would be a performance killer.
On a related note , do you know which containers (servers) e.g. tomcat , weblogic etc supports runtime modification of web.xml and how does it actually happens do they expose JMX webpage or it simply modification using text editor.