The attacks in southeastern Eritrea, carried out in two waves over recent days, are the first such strikes since the countries fought a devastating, and largely unresolved, war in 1998-2000 in which some 70,000 people were killed.
Only five years earlier, Eritrea split from Ethiopia after a three-decade secessionist war and cut off the region's most populous state from access to the Red Sea.
The Ethiopian raids whipped up new tension between the archrivals, which both have tens of thousands of troops deployed along their disputed border. There was no immediate indication that either side was mobilizing further.
Military analysts said they doubted that direct conflict between the two states was imminent but observed that they may focus their feud on Somalia, where Ethiopian forces are aiding the United States by fighting the al-Shabaab Islamist movement, which Eritrea is accused of supporting.
"This is likely to be the main arena between Ethiopia and Eritrea for the time being," one Western observer commented. "Neither side wants to rush into anything they may not be able to get out of."
Al-Shabaab is being squeezed on three fronts: the Ethiopians in the north, U.S.-aided Kenyan forces who invaded in the south in October and U.S.-backed African Union forces supporting the TFG in Mogadishu in the center.
U.N. reports have indicated Eritrea has supported al-Shabaab in the past. Asmara denies that.
Still, Eritrea, which has become increasingly isolationist in recent years, isn't well disposed toward the Americans, whom it accuses of aiding Addis Ababa.
Regarding the recent Ethiopian attacks, Eritrea's foreign affairs minister, Osman Saleh, declared, "It's patently clear that the Ethiopian regime could not have unleashed such a flagrant act of aggression with such audacity without the protection and succor of the United States in the U.N. Security Council."
Ethiopia's autocratic leader, Prime Minister Meles Zenawi, "has been cranking up the rhetorical level against Eritrea for since last spring," observed Dan Connell, an expert on Ethiopia at Simmons College, Boston.
Zenawi, who's none too popular in his own land, has openly called for regime change in Asmara.
A U.N. monitoring group says Eritrean President Isaias Afewerki has sought to wage proxy wars against Addis Ababa by funding Ethiopian rebel groups. He recruited one group, the Oromo Liberation Front, in 2008 and trained it for an attack on Addis Ababa, to "make it like Baghdad."
The monitoring group said that included an abortive plot, masterminded by Eritrea's intelligence service, to bomb a summit of the African Union at its headquarters in the Ethiopian capital in January.
The first Ethiopian raids occurred Thursday. Zinawi's government said its ground forces attacked three bases where an Ethiopian rebel group received military training from the Eritrean army.
The Eritrean government in Asmara said the Ethiopians hit "Eritrean army outposts."
Addis Ababa said the raids were in retaliation for Eritrean-backed militants who attacked European tourists in the remote Afar region of northern Ethiopia in January. Five tourists were killed. Two Germans were kidnapped then released.
The Ethiopian incursion 10 miles into Eritrea was followed by more attacks Saturday but Addis Ababa didn't specify the targets.
All the action took place in the region around Badme, a ramshackle border town that was the center of the 1998-2000 war.
Badme was awarded to Eritrea under a 2002 ruling by an international boundary commission based in The Hague but Ethiopia refused to cede any territory.
Asmara routinely accused the United States of supporting predominantly Christian Ethiopia, which has acted as a U.S. proxy to fight Islamist insurgents linked to al-Qaida in neighboring Somalia.
In December 2006, Meles sent an armored force into Somalia, backed by U.S. arms and intelligence, to crush a short-lived Islamist regime there that was replaced by a United Nations-supported Transitional Federal Government.
The Ethiopians later pulled out but in December they sent another armored force into Somalia against al-Shabaab, which was formally allied with al-Qaida in February.