I'm bumping my own thread, because this is in fact a big deal, and 
fundamentally affects how we can structure our Android apps.

**
Create android library project A, mark as library.
Create android library project B, mark as library. 
Press button Android>Library>Add, and add reference to project A from project B.


Previously this has been prohibited by eclipse.
It should not be possible to reference another library project, as described 
inhttp://developer.android.com/guide/developing/projects/index.html

"Note that a library project cannot itself reference another library project"


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