I've noticed a problem with all my sites recently that an application error gives a 200 response and the "Application error (Rails)" message rather than the contents of 500.html. This can be any kind of error such as NoMethod, Syntax error, RecordNotFound etc.all of which you'd expect to result in the 500.html page and a 500 response.
I was able to confirm that this happens both on my production server (lighttpd+fastcgi) and on my development machine with either mongrel or webrick. It also happens with any browser/operating system combination.
I set up a brand new rails site with nothing but a controller with one action. I put a deliberate error in that action and was able to confirm that the problem still existed, ruling out any problem with my aplication code or plugins.
My Rails version is 1.1.6
Many thanks