While not knowing what the exact cause of your error, I had this same error for a bit and I resolved it by deleting that app engine, starting over and instead of at step one inputting:
rails new myapp --skip-active-record --skip-test-unit --skip-javascript --skip-bundle
inputted:
rails 3.2.16 new myapp --skip-active-record --skip-test-unit --skip-javascript --skip-bundle
I then followed the rest of the steps and the redirect error disappeared and everything worked as expected.
Hopefully that helps!