The last week or two have been quite interesting. We are finally starting to see performance numbers that seem good enough. Take a look at Nick's posts here and here for more information on this. The second post contains some valuable tips. In particular, make sure to turn off ObjectSpace and run with -server. Both of these will improve your performance and scalability quite much.
Secondly, JRuby on Rails on Oracle Application Server. Nice, huh? I would imagine more interesting things coming out of all this.
But the end message seems to be that JRuby is really ready now. The 1.1 release looks like it's going to be something really amazing. I can't wait!