<p>Is there a good ruby gem for a WYSIWYG editor that will easily work with a rails app?</p>

Though it's certainly not a direct answer, in the past I've found I prefer to use RedCloth (or a Markdown parser if you don't enjoy Textile) and use a simple textarea with an AJAXy preview. Generally speaking, WYSIWYG editors have a long history of creating redundant tags and similar, leading to potentially broken pieces of HTML.