JRuby incompatible character encodings: UTF-8 and ASCII-8BIT

failure case

# Failure case using mysql jdbc adapter
$ rails new blog -d mysql
$ cd blog
$ rake db:create
$ rails c
Loading development environment (Rails 3.2.8)
jruby-1.7.0 :001 > class Foo < ActiveRecord::Base
jruby-1.7.0 :002?>   end
 => nil
jruby-1.7.0 :003 > a = ["ÅÆ", "\"ÅÆ"]
 => ["ÅÆ", "\"ÅÆ"]
jruby-1.7.0 :004 > "(foo = ? bar = ?)".gsub('?') {Foo.connection.quote(a.shift)}
   (4.0ms)  SET SQL_AUTO_IS_NULL=0
Encoding::CompatibilityError: incompatible character encodings: UTF-8 and ASCII-8BIT
     from org/jruby/RubyString.java:3014:in `gsub'
     from (irb):4:in `evaluate'
     from org/jruby/RubyKernel.java:1065:in `eval'
     from org/jruby/RubyKernel.java:1390:in `loop'
     from org/jruby/RubyKernel.java:1173:in `catch'
     from org/jruby/RubyKernel.java:1173:in `catch'
     from /Users/tbeauvais/.rvm/gems/jruby-1.7.0/gems/railties-3.2.8/lib/rails/commands/console.rb:47:in `start'
     from /Users/tbeauvais/.rvm/gems/jruby-1.7.0/gems/railties-3.2.8/lib/rails/commands/console.rb:8:in `start'
     from /Users/tbeauvais/.rvm/gems/jruby-1.7.0/gems/railties-3.2.8/lib/rails/commands.rb:41:in `(root)'
     from org/jruby/RubyKernel.java:1019:in `require'
     from script/rails:6:in `(root)'
jruby-1.7.0 :005 > RUBY_DESCRIPTION
 => "jruby 1.7.0 (1.9.3p203) 2012-10-22 ff1ebbe on Java HotSpot(TM) 64-Bit Server VM 1.6.0_37-b06-434-11M3909 [darwin-x86_64]"
jruby-1.7.0 :006 > 

success case

# Success case using postgres jdbc adapter
$ rails new blog -d postgresql
$ cd blog
Note - may need to edit database.yml for correct db user
$ rake db:create
$ rails c
Loading development environment (Rails 3.2.8)
jruby-1.7.0 :001 > class Foo < ActiveRecord::Base
jruby-1.7.0 :002?>   end
 => nil
jruby-1.7.0 :003 > a = ["ÅÆ", "\"ÅÆ"]
 => ["ÅÆ", "\"ÅÆ"]
jruby-1.7.0 :004 > "(foo = ? bar = ?)".gsub('?') {Foo.connection.quote(a.shift)}
 => "(foo = 'ÅÆ' bar = '\"ÅÆ')"
jruby-1.7.0 :005 > RUBY_DESCRIPTION
 => "jruby 1.7.0 (1.9.3p203) 2012-10-22 ff1ebbe on Java HotSpot(TM) 64-Bit Server VM 1.6.0_37-b06-434-11M3909 [darwin-x86_64]"
jruby-1.7.0 :006 >