grep with --exclude was resulting in hits on files with names like 'app/models/.svn/text-base/reading_list.rb.svn-base'. Piping through an additional grep process seems a little wasteful, but it does the job for folks who have an app on Subversion.

lib/application_checker.rb

@@ -378,9 +378,9 @@ module Rails
         value = ""
         # Specifically double quote for finding 'test_help'
         command = if double_quote
-                    "grep -r #{"-P" if perl_regex} --exclude=\*.svn\* \"#{text}\" #{where}"
+                    "grep -r #{"-P" if perl_regex} \"#{text}\" #{where} | grep -v \.svn"
                   else
-                    "grep -r #{"-P" if perl_regex} --exclude=\*.svn\* '#{text}' #{where}"
+                    "grep -r #{"-P" if perl_regex} '#{text}' #{where} | grep -v \.svn"
                   end
         
         Open3.popen3(command) do |stdin, stdout, stderr|