Looks to me like Microsoft isn't taking the whole Rails movement lying down. First off they have IronRuby. But why stop there? I just read thru and watched the screencasts from the MVC demo at Alt.Net (click here to watch them, and yes you do want to read and watch them!) and I have to say I am quite impressed.
It really does look like the boys at MS realized that RoR and Monorail and other MVC platforms brought a real value add for some (in my book many) web development scenarios and as such are moving to Microsoft the Web MVC development experience. Now add in the DLR (I do love what it can offer because I have become a big fan of Dynamic languages) and top it off with LINQ (or DLINQ) and you have a very compelling argument to develop your next RoR or Monorails app using all microsoft goodness.
So the good and bad of it for me..
The good: Microsoft level of dependability, scaleability, performance, etc..
The bad: I want all my projects on one platform. I really don't want to mix and match my apps between MonoRail and System.Web.MVC and RoR! One MVC to rule them all Damnit!!!!! Its an in-determinit amount of time away (the Screencasts are of an internal experimental build).