Not redirecting with 404 status and rails 2.3.2

[subBlue]

We've just noticed another problem with LS 4.x Ent and our Rails 2.3.x sites not redirecting when the status is set to 404.
We have a Rails action that catches any invalid url requests and then redirects with a 404 status to a custom 404 sitemap page in the application. Since moving to Rails 2.3.2 this has stopped working and we see a Rails generated block of HTML saying 'You are being redirected...' With our Rails 2.0.5 sites on the same server the 404 redirect is working properly. We have temporarily changed the code to use the 301 status, which works fine, but isn't ideal from an SEO point.
Our Rails 2.3.x don't have this issue with Apache mongrel/passenger setups so there is something specific to LS.