gistfile1.sh

# Iterate the directory tree up looking for a .rvmruby file.
# If it finds one, it executes rvm use ${content_of_.rvmruby}.
#
# This way you can easily automate ruby version switching for
# some projects.
rvm_set_ruby_for_path() {
  orig_path=$(pwd)
  
  until [[ -f .rvmruby || `pwd` == "/" ]]; do
    builtin cd ..
  done
  
  if [[ `pwd` != "/" ]]; then
    rvm use $(cat "`pwd`/.rvmruby")
  fi
 
  builtin cd "${orig_path}"
}

# Automatically change set rvm's ruby when directory changes.
cd() {
  builtin cd $@ && rvm_set_ruby_for_path
}

gistfile2.txt

Usage example:

$ echo "1.8.7@rails2" > Projects/Foo/.rvmruby
$ echo "1.9.2@rails3" > Projects/Bar/.rvmruby

$ cd Projects/Foo
Using /Users/divoxx/.rvm/gems/ruby-1.8.7-p302 with gemset rails2

$ cd ../Bar
Using /Users/divoxx/.rvm/gems/ruby-1.9.2-p0 with gemset rails3