Description of problem:
Rails quickstart no longer works with Enterprise 1.2. When creating an application, it fails after/during the assets being pre-compiled.

Version-Release number of selected component (if applicable):
1.2.1

How reproducible:
Always

Steps to Reproduce:
1. rhc app-create lab ruby-1.9 mysql-5.1 --from-code https://github.com/openshift/rails-example.git --trace
OR
1. Use the console to create a rails quickstart


Actual results:
Application successfully created

Expected results:
Application creation fails. Application is not created at all.

Additional info:
Using rhc and --trace, the following is seen:
=======================
Using bundler (1.1.4)
Installing rails (3.2.13)
Installing sass (3.2.7)
Installing sass-rails (3.2.6)
Installing sqlite3 (1.3.7) with native extensions
Installing uglifier (1.3.0)
Your bundle is complete! It was installed into ./vendor/bundle
Post-install message from rdoc:
Depending on your version of ruby, you may need to install ruby rdoc/ri data:

<= 1.8.6 : unsupported
 = 1.8.7 : gem install rdoc-data; rdoc-data --install
 = 1.9.1 : gem install rdoc-data; rdoc-data --install
>= 1.9.2 : nothing to do! Yay!
Precompiling with 'bundle exec rake assets:precompile'
/opt/rh/ruby193/root/usr/bin/ruby /var/lib/openshift/525daa1df31aa290de000034/app-root/runtime/repo/vendor/bundle/ruby/1.9.1/bin/rake assets:precompile:all RAILS_ENV=production RAILS_GROUPS=assets
Target directory must exist for environment variables
An error occurred executing 'gear postreceive'

For more details about the problem, try running the command again with the '--trace' option.
    from /home/tiwillia/.gem/ruby/gems/rhc-1.14.7/lib/rhc/rest/client.rb:268:in `block in request'
    from /home/tiwillia/.gem/ruby/gems/rhc-1.14.7/lib/rhc/rest/client.rb:250:in `block in attempt'
    from /home/tiwillia/.gem/ruby/gems/rhc-1.14.7/lib/rhc/rest/client.rb:249:in `each'
    from /home/tiwillia/.gem/ruby/gems/rhc-1.14.7/lib/rhc/rest/client.rb:249:in `attempt'
    from /home/tiwillia/.gem/ruby/gems/rhc-1.14.7/lib/rhc/rest/client.rb:256:in `request'
    from /home/tiwillia/.gem/ruby/gems/rhc-1.14.7/lib/rhc/rest/base.rb:28:in `rest_method'
    from /home/tiwillia/.gem/ruby/gems/rhc-1.14.7/lib/rhc/rest/domain.rb:52:in `add_application'
    from /home/tiwillia/.gem/ruby/gems/rhc-1.14.7/lib/rhc/commands/app.rb:454:in `create_app'
    from /home/tiwillia/.gem/ruby/gems/rhc-1.14.7/lib/rhc/commands/app.rb:109:in `block in create'
    from /home/tiwillia/.gem/ruby/gems/rhc-1.14.7/lib/rhc/highline_extensions.rb:190:in `call'
    from /home/tiwillia/.gem/ruby/gems/rhc-1.14.7/lib/rhc/highline_extensions.rb:190:in `section'
    from /home/tiwillia/.gem/ruby/gems/rhc-1.14.7/lib/rhc/highline_extensions.rb:204:in `paragraph'
    from /home/tiwillia/.gem/ruby/gems/rhc-1.14.7/lib/rhc/helpers.rb:293:in `block (2 levels) in <module:Helpers>'
    from /home/tiwillia/.gem/ruby/gems/rhc-1.14.7/lib/rhc/commands/app.rb:105:in `create'
    from /home/tiwillia/.gem/ruby/gems/rhc-1.14.7/lib/rhc/commands.rb:269:in `execute'
    from /home/tiwillia/.gem/ruby/gems/rhc-1.14.7/lib/rhc/commands.rb:260:in `block (3 levels) in to_commander'
    from /usr/local/share/gems/gems/commander-4.1.4/lib/commander/command.rb:180:in `call'
    from /usr/local/share/gems/gems/commander-4.1.4/lib/commander/command.rb:180:in `call'
    from /usr/local/share/gems/gems/commander-4.1.4/lib/commander/command.rb:155:in `run'
    from /usr/local/share/gems/gems/commander-4.1.4/lib/commander/runner.rb:402:in `run_active_command'
    from /home/tiwillia/.gem/ruby/gems/rhc-1.14.7/lib/rhc/command_runner.rb:102:in `run!'
    from /usr/local/share/gems/gems/commander-4.1.4/lib/commander/delegates.rb:7:in `run!'
    from /home/tiwillia/.gem/ruby/gems/rhc-1.14.7/lib/rhc/cli.rb:37:in `start'
    from /home/tiwillia/.gem/ruby/gems/rhc-1.14.7/bin/rhc:20:in `<top (required)>'
    from /usr/local/bin/rhc:23:in `load'
    from /usr/local/bin/rhc:23:in `<main>'
=======================