I just attached the following to the Jira bug.
In snooping around the STS distribution, I found the following code in
C:\springsource\sts-2.3.2.RELEASE\configuration\org.eclipse.osgi\bundles\898\1.cp\src\com\springsource\sts\grails\core\model\GrailsBuildConfig.java
// make sure that we use the Ivy dependency resolution strategy for Grails 1.2
// TODO CD make version number detection more flexible
if (settings.getGrailsVersion().startsWith("1.2")) {
jarFiles.addAll(settings.getTestDependencies());
jarFiles.addAll(settings.getProvidedDependencies());
Based on this find, I tried downgrading my project from Grails 1.3.2 to Grails 1.2 and ran "refresh dependencies". Sure enough, the dependencies were correctly loaded from Ivy.
Looks like someone needs to do the TODO. I can take a stab at it once I figure out how to check out the source code...