There was a good talk by Charles Nutter at Baruco this year about JRuby. It looks to be pretty much there, and from the benchmarks performance looks a lot better than MRI.
Last time I looked into it jruby itself was faster than MRI, especially if you take multithreading into account. But rails-on-jruby was a different story because some metaprogramming things that rails does are terrible for the JIT compilers.
Charles ominously called "dark matter" inside rails.
http://www.youtube.com/watch?v=8ZEAwWLwmfQ