Rails-related how?
?:-/
If you can configure Warden to use the md5 passwords, then do that. Then, modify the login process so that upon successful login you save their password (which you have at the moment in plain text) as a bcrypt-ed string. On next login, verify against bcrypt.
For more info, take a look at authlogic's "migrate from restful authentication" to see how it handles it...
-philip