After your reply I checked from my Eclipse/mars install and... it is correctly using http://gnuarmeclipse.sourceforge.net/updates. No idea why KSD 3.2 isn't working with it unless it could be an indendent or older jre.
This makes me want to head back over to mcuoneclipse and read up on how to install the nxp/freescale plugins directly in eclipse/mars but... I'd have to think if that will actually buy me anything with the targets I have and mbed. It would definitely complicate the "mbed<-cli> export -i <something eclipse based>" is broken test.