See http://www.michaelmelanson.net/post/85530088/in-place-editing-in-rails for an explanation.

gistfile1.rb

  def editable_content_tag(elemtype, obj, prop, editable=true, options = {}, editOptions = {}, ajaxOptions = {})
      objname = obj.class.to_s.downcase
      options[:url] = url_for(obj) unless options.has_key? :url
      options[:url] += '.json'
      options[:id] = dom_id(obj)+"_#{prop}" unless options.has_key? :id
      ajaxOptions[:method] = 'put'
      edops = jsonify editOptions
      ajops = jsonify ajaxOptions

      contents = obj.send(prop)
      contents = "(not set)" if contents.blank?

      tg = content_tag  elemtype, 
                        contents,
                        options = options

      if editable then
        tg += "
             <script type='text/javascript'>\n
                 new Ajax.InPlaceEditor('#{options[:id]}', '#{options[:url]}', { 
                          ajaxOptions: { #{ajops} },
                          callback: function(form, value) 
                            { return 'authenticity_token=#{form_authenticity_token}&#{objname}[#{prop}]=' + escape(value) },
                          onComplete: function(transport, element) 
                            { element.innerHTML=transport.responseText.evalJSON().#{objname}.#{prop};}"
        tg += ",#{edops}" unless edops.empty?
        tg += "});\n"
        tg += "         </script>\n"

      end
  end

  #stupid helper helper to convert a hash into a JSON options list
  # (without the encompasing {}'s or any type of recursion
  #Is there a rails API function that does this? 
  def jsonify hsh
      str = ''
      first = true
      hsh.each do |k,v|
        str += ', ' unless first
        str += "#{k}: "
        str += "'" unless (v.class == Fixnum or v.class == Float)
        str += v.to_s
        str += "'" unless (v.class == Fixnum or v.class == Float)
        first = false
      end
      str
    end