I have tried this on multiple projects including the rhodes api samples and fresh blank project.
Strangely, I can run a 'rake device:iphone:production' to generate the .app from command line, install that through itunes and everything works fine. It would be much more convenient to deploy through Xcode though.
May 19 14:48:04 CCQLWMP7FFCJ kernel[0] <Debug>: launchd[920] Container: /private/var/mobile/Applications/BAB47E6E-B0EF-43D3-8374-40618FCF04F2 (sandbox)
May 19 14:48:04 CCQLWMP7FFCJ rhorunner[920] <Error>: objc[920]: Class WebView is implemented in both /System/Library/PrivateFrameworks/WebKit.framework/WebKit and /var/mobile/Applications/BAB47E6E-B0EF-43D3-8374-40618FCF04F2/
rhorunner.app/rhorunner. One of the two will be used. Which one is undefined.
May 19 14:48:04 CCQLWMP7FFCJ networkd[80] <Warning>: Analytics Engine: double ON for app: com.apptricity.mobile.kitchensink
May 19 14:48:04 CCQLWMP7FFCJ rhorunner[920] <Warning>: didFinishLaunchingWithOptions: (null)
May 19 14:48:04 CCQLWMP7FFCJ rhorunner[920] <Warning>: Rhodes starting application...
May 19 14:48:04 CCQLWMP7FFCJ rhorunner[920] <Warning>: Create new detached thread for initialization stuff
May 19 14:48:04 CCQLWMP7FFCJ rhorunner[920] <Warning>: Init all windows
May 19 14:48:04 CCQLWMP7FFCJ rhorunner[920] <Warning>: Init appManager
May 19 14:48:04 CCQLWMP7FFCJ rhorunner[920] <Warning>: filePath1: /var/mobile/Applications/BAB47E6E-B0EF-43D3-8374-40618FCF04F2/
rhorunner.app/nameMay 19 14:48:04 CCQLWMP7FFCJ rhorunner[920] <Warning>: filePath2: /var/mobile/Applications/BAB47E6E-B0EF-43D3-8374-40618FCF04F2/Library/Caches/Private Documents/name
May 19 14:48:04 CCQLWMP7FFCJ rhorunner[920] <Warning>: filePath1: /var/mobile/Applications/BAB47E6E-B0EF-43D3-8374-40618FCF04F2/
rhorunner.app/hashMay 19 14:48:04 CCQLWMP7FFCJ rhorunner[920] <Warning>: filePath2: /var/mobile/Applications/BAB47E6E-B0EF-43D3-8374-40618FCF04F2/Library/Caches/Private Documents/hash
May 19 14:48:04 CCQLWMP7FFCJ rhorunner[920] <Warning>: Main Sym-Link founded - disable restoring !
May 19 14:48:04 CCQLWMP7FFCJ rhorunner[920] <Warning>: Lib File is Exist: /var/mobile/Applications/BAB47E6E-B0EF-43D3-8374-40618FCF04F2/Library/Caches/Private Documents/lib
May 19 14:48:04 CCQLWMP7FFCJ rhorunner[920] <Warning>: Init logconf
May 19 14:48:04 CCQLWMP7FFCJ rhorunner[920] <Warning>: Create rhodes app
May 19 14:48:04 CCQLWMP7FFCJ rhorunner[920] <Warning>: Init network monitor
May 19 14:48:04 CCQLWMP7FFCJ rhorunner[920] <Warning>: Show loading page
May 19 14:48:04 CCQLWMP7FFCJ rhorunner[920] <Warning>: Start rhodes app
May 19 14:48:04 CCQLWMP7FFCJ rhorunner[920] <Warning>: root view: <UIView: 0x18356a0; frame = (0 20; 320 548); hidden = YES; autoresize = W+H; layer = <CALayer: 0x1835790>>
May 19 14:48:04 CCQLWMP7FFCJ rhorunner[920] <Warning>: Init cookies
May 19 14:48:04 CCQLWMP7FFCJ rhorunner[920] <Warning>: Init controllers
May 19 14:48:04 CCQLWMP7FFCJ rhorunner[920] <Warning>: Init delegates
May 19 14:48:04 CCQLWMP7FFCJ rhorunner[920] <Warning>: Initialization finished
May 19 14:48:05 CCQLWMP7FFCJ ReportCrash[921] <Notice>: ReportCrash acting against PID 920
May 19 14:48:05 CCQLWMP7FFCJ ReportCrash[921] <Notice>: Formulating crash report for process rhorunner[920]
May 19 14:48:05 CCQLWMP7FFCJ com.apple.launchd[1] (UIKitApplication:com.apptricity.mobile.kitchensink[0x6d32][920]) <Warning>: (UIKitApplication:com.apptricity.mobile.kitchensink[0x6d32]) Job appears to have crashed: Abort trap: 6
May 19 14:48:05 CCQLWMP7FFCJ backboardd[28] <Warning>: Application 'UIKitApplication:com.apptricity.mobile.kitchensink[0x6d32]' exited abnormally with signal 6: Abort trap: 6
May 19 14:48:05 CCQLWMP7FFCJ ReportCrash[921] <Notice>: Saved crashreport to /var/mobile/Library/Logs/CrashReporter/rhorunner_2014-05-19-144805_CCQLWMP7FFCJ.plist using uid: 0 gid: 0, synthetic_euid: 501 egid: 0