Damian Steer, regular JRuby contributor, has taken the IRB applet and run with it. He's gotten readline working (history, line editing, tab-completion), added some fonts and colors to differentiate things, and even put in an intellisense-like menu for tab completion of method names.
Very cool stuff. Keep in mind also that this could be embedded in any app (like an IDE) to provide a really nice looking interactive console. Thanks Damian!