AFAIK, 1.9.1 incompatibility was due to a fault in Ruby itself, rather than Rails. And even though it seems to work with 1.9.2-head, that does have some major issues, like SEGV/Bus errors in native classes and gems alike (see http://redmine.ruby-lang.org/issues/show/3132)

I've put my Rails 3 projects on hold for a while.

As far as I know, it does. http://synthesis.sbecker.net/articles/2010/03/21/asset-packa...

I tried 3.0pre with Ruby 1.9 a while back - seemed to work OK.