Update: There is now a nice demo of how selenium on rails works.

Jonas Bengtsson has created an initial version of a Selenium plugin for RoR.

I have been using Selenium for a while now and this certainly looks promising. There are some minor details in this release that need to be fixed such as coloring of completed test actions and test cases (mine are not highlighted). A nice addition would be if RadRails supported code completion of selenium actions.