As long as Rails remains virtually unaltered and fully functional, I suppose JRuby on Rails isn't too bad. I'm a tad protective of the term Ruby on Rails, though, and I want to make sure that there's no confusion about what it refers to. But I can't immediately see any confusion points here.
So the JRuby on Rails name should stick, and we have cautious approval from the Rails creator himself to use it. Huzzah!