The only 'gotcha' for us is that the default image and file upload
managers are pretty weak. What you see on the demo site are the paid
add-ons for each. For what I am doing, I wouldn't have minded paying -
except that the integrations are available in PHP and .Net - no Rails.
Since you have it installed, take it for a spin and see if it suits
you. If you need better image management, you might look at
http://github.com/haikuwebdev/aftimagr/tree/master - a TinyMCE plugin
with preview capabilities. It is still beta-ish but see what you
Otherwise, FCKeditor used to integrate just about as easily. I haven't
tried it on Rails 2.1, but would expect it to work just fine and have
better out of the box support for file upload and linking.