Can you Distribute a Ruby on Rails Application without Source?

If you can't wait for the delivery of RubyEncoder, then I think ZenObfuscate is the most promising. Though it may require some modifications to your source code, they do say this on their site:

ZenObfuscate costs $2500 for a site license or is individually negotiable for other licensing schemes. Yes, that is expensive. That was on purpose. But don't let that thwart you too much. If your product is really cool and we want to see it succeed, we'll make it work. "Really cool" is not freecell.

Of course, for $2500 (or more), you'd hope to get a few tweaks to the compiler that'd make your codebase fully supported. It might be worth engaging them in the conversation.

If you release the source, obfuscated or otherwise, your app will be pirated. See, for example, Mint. It depends on what you're building, but you may find that you're better off releasing the app as a hybrid of sorts: A hosted app with a well-defined API, and a component that runs on the customer's server. As long as the true value of your product lives on the server side, you don't need to obfuscate your code, and you can just release the source code unmodified. Additionally, this may also give you the opportunity to reach clients running, say, PHP rather than Ruby. See, for example, Google Analytics, HopToad, Scout, etc, etc.

You can, but it wouldn't do anything to prevent somebody from reverse-engineering or modifying it. I remember there was an article about similar attempts to obfusticate Perl and how they could be effectively bypassed by a debugger and 5 minutes of effort.

Your best option right now is to use JRuby. A little bit of background: My company (BitRock) works with many proprietary and commercial open source vendors. We help them package their server software, which is typically based on PHP, Java or Ruby together with a web server or application server (Apache, Tomcat), the language runtime and a database (typically Postgres, MySQL) into a self-contained, easy to use installer. We have a large number of PHP-based customers (including HelpSpot, which you mention) but also several Rails-based ones. In the case of the RoR customers the norm is to use JRuby together with Tomcat or Glassfish although in some cases we also bundle a native Ruby interpreter to run specific scripts that rely on libraries not yet ported to JRuby (usually not core to the application). JRuby has matured quickly and in many cases it actually runs their code faster than regular Ruby. You will need to also consider that although porting your code to JRuby is fairly straightforward, you will need to invest some time on that. You may want to check JRuby Stack which is a free installer of everything you need to get started. Good luck!