My friend sur wrote and shares his code for Ajax based drag drop sortable tree for rails. He is also trying to pluginize this, and soon it will be publicly available. Find more detail here.

I have wrote my first plugin(state_select). This plugin allows to create drop down list for states, same as country_select method in rails. I know this is not a big deal…
Curently it can generate state list for India, US, and Canada(default is US).
Usage: 

state_select(object, method, country=’US’, options = {}, html_options = {})

Return select and option tags [...]