I host this blog on slicehost and used to have a couple of slices, one for rails, and one for client sites, php, email etc. Just a few hours ago I moved my blog from my Rails slice to what I call my CPanel slice using passenger and the process was smooth sailing. In the process I decided to leverage what I learned about Cpanel and Passenger and I created a gem calledcpanel-passenger which can be found on github.
The gem just installs a command called cpanel-passenger that takes a bunch of parameters to modify the Apache config in a way that will not make Cpanel upset.
There is a lot of work to do to make this script do all that one would want, but at least it makes setting up a rails app on passenger a simpler task with Cpanel. Feel free to fork the gem and add to it. Its just a matter of time and the Cpanel folks will bundle passenger as a supported module, but until then try this out on your VPS that is running Cpanel.