Check out http://api.rubyonrails.org/classes/ActiveSupport/BacktraceCleaner.html. Rails uses this to clean up your backrace before display.
You could use it like this:
Rails.backtrace_cleaner.clean(exception.backtrace)
I'm actually looking in the rails source code, because I thought your exception might have been cleaned already by the time it gets to your render_error method.