Attachment_Fu is a popular plugin that is used for file uploads in Rails. Rails built-in file upload feature is not sophisticated and is not used much in production applications. You must consider using some kind of background processing to offload the file uploads to a separate process. Some options are BackgroundDRB, cron etc.
To answer your question more specifically: I know of nothing built
into rails for developing client-side applications that run outside
the client's browser. You mention Java Web Start. I'm pretty familiar
with that technology. Java Web Start is nothing more that a means to
distribute, and update, a client-side desktop application.
This depends greatly on your target audience, but I generally try to
avoid using client-side applications distributed through Java Web
Start. This technology is fine if there is a close relationship with
users, but if those users are spread over a wide area, or the
relationship with them is relatively anonymous then a Java Web Start
style solution can be impractical. For example, if I were to navigate
to a web site that had a "Download our file upload application" link
on it then my next action would be to navigate somewhere else. Also
you would have to be sure that your clients have the runtime
environment to execute your application (Java Runtime Environment
(JRE) in the case of Java Web Start). You would be asking for a lot of
trust from your clients, since you installing software on their
computer. Many users may not appreciate that very much.