I generally tell capistrano to deploy in something parallel to the httpdocs directory, and then add in the domain vhost.conf proxy directives, running the rails app as normal on a high port with mongrel.
Plesk gets in the way a little, but your main problem will be getting subversion and ssh to play nice with capistrano on one of those god-awful 1&1 boxes...
I'm not running capistrano or mongrel, but the vhost.conf redirection
worked for me. the rails directory is actually httpdocs/railsapp, and
it's running great. Thanks.