So the issue was that you're running your app under the wrong Ruby. You intended it to be run under RVM Ruby 1.8, but it was actually being run under Ruby 1.9 thanks to the "passenger_ruby /usr/bin/ruby" option that you see there.
You need to use the passenger_ruby config option to tell Passenger to use RVM Ruby 1.8. The documentation teaches you how to set this option properly when using RVM.