Can you host arbitrary Rails applications in other rails applications like you can host arbitrary Padrino applications within another Padrino application? (it should even be possible to host padrino apps in any other rack app, though I've never done that so far, it might need a little hackery)
Rails is a Rack application, so yes a Rails app could play host to more than one sub app. In fact this is such a good pattern, that Rails core added Rails Engines which do just but better.
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Can you host arbitrary Rails applications in other rails applications like you can host arbitrary Padrino applications within another Padrino application? (it should even be possible to host padrino apps in any other rack app, though I've never done that so far, it might need a little hackery)
Yes, they're called Rails Engines:
http://edgeapi.rubyonrails.org/classes/Rails/Engine.html
Rails is a Rack application, so yes a Rails app could play host to more than one sub app. In fact this is such a good pattern, that Rails core added Rails Engines which do just but better.