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"What does the dropbox client do that is significantly different from this?"

Using inotify (linux). Polling doesn't scale.

Yeah, I'm looking into inotify to see how I can implement that with Ruby. Would definitely be nicer than simply polling the directory.

Try rb-inotify (linux) and rb-fsevent (os x):

I'd assumed the "poll" there was the connection to the server - I hadn't even thought about polling for modified files!