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I believe Hyperloop[0] tries to accomplish something similar

In theory you could already do this with Opal (https://github.com/opal/opal).

Does not seem to be actively developed, however. Last commit was in early 2016: https://github.com/voltrb/volt/

Nice.

Anyone else getting a "Connection Lost..." message as soon as they visit the page?

yes, and it's not only ruby doing this, various other languages are doing it also.

So it's going to be interesting to see what kind of disruption that has on javascript on the client side.

There is no Ruby on Rails for mruby, yet.

What are the differences between mruby and MRI that prevent this?

mruby is an embedded language so it's missing a lot of the built-in features that MRI has.