I grabbed a 1.7.5-dev nightly today (Sept. 4, 2013) and Pathname#realpath in 1.9 mode is returning a String instead of a Pathname. In 1.7.4 it returned a Pathname and it looks like it should, according to the docs. Since it's returning a String, Rails is unable to boot because it tries calling join on the value, expecting a Pathname.
Reproduction case would be any Rails app, I think. I'm running Rails 3.2.13.