Heh, I am just writing a blog entry with the review (I am about 75% ready, probably will publish today).
You should know enough to be comfortable with some basic to pre-intermediate stuff (in practice this means you don't need to refer to the manual every 5 minutes if you write a bit more complicated stuff) This should be acquired from Ruby for Rails (IMHO - there are lot of other ways to begin, but for me this was the best)). If you need some more, you should grab The Ruby Way and/or the Pickaxe, write a lot to ruby-talk etc.
Once you are ready to roll your own project (which is IMHO the second step after you have some knowledge under your belt), nothing beats the Ruby Cookbook. I have done this myself recently. I had no idea about documenting Ruby code, packaging the whole program into a gem, writing unit tests (in Ruby) and automatizing these tasks (and a lot of other things - not to mention I had no clue about Ruby-ish constructs and idioms). However, with the Ruby Cookbook by my side, learning and putting things into practice from writing the first line until packaging the whole thing into a gem was a piece of cake. I have picked up a lot of idiomatic thing as well - and I think the cookbook is the best stuff for this.
Of course If you want to just code some smaller stuff and refer to the cookbook sometimes, it is cool for that purpose too. It has all the typical problems that a Ruby hacker encounters.
Conclusion: The Cookbook really shines if you are actually doing something and would like to do it the Ruby way. Reading it from cover to cover from the beginning might also work - never tried :)
p.s.: I will also send the full review once I am ready with it.