So... after weeks of fighting all of this and trying to get Rails to function under Apache, I have given up on it, sort of.
I have set up an alternative server (lighttpd) to serve the application on an alternate port and have decided to forget about using Apache for now.
I was able to determine that the issue is between Apache and both mod_cgi and mod_fcgi (I tried running it using both the regular CGI and Fast CGI methods with no success). The problem centers around the unix sockets used to communicate between the modules and the server. The sockets get created but when the module tries to connect, it is refused and Apache throws a 500 Server error.
I got frustrated to extremes and actually managed to break my server's DNS inadvertently while grasping at straws and trying to update the server packages to the latest versions. (Whatever you do DO NOT let yum or up2date install the bind.chroot RPM, it will break your DNS).
So anyway, after all of this frustration and angst, I finally have the server delivering the application forms and (mostly) working. There are some minor issues to resolve in the actual application with some hardcoded URLs the developer put in as well as a bit of a routing issue.
So this now leads me to my next adventure... figuring out how to set up routing.rb so it will point to the correct start page in the application. Right now, if I just browse to the application root and don't add a definite route, I get an error saying it doesn't know what to do with route "/"
Once I finish getting this set up, I will share a sanitized version (minus my domain info of course) of the lighttpd.conf file so that somebody else can use it if they need to.