I am trying on a fresh FreeBSD and I haven't had rails installed
before. Also ruby19 has just been updated to 1.9.1 so I don't think
reinstalling everything would make any difference. It is like a fresh
install. And your steps worked on my system because I could install
rails without problems. It is only that running rails is failing.

But I've just tried the edge version of rails, not the 2.3.0 RC1, and
it worked! So it looks like there are some bugs in the RC1 version
which have been fixed in the edge version.
Thanks for your help.
Greg
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