bin/rails uses the new generator.

railties/bin/rails

@@ -7,14 +7,5 @@ if %w(--version -v).include? ARGV.first
   exit(0)
 end
 
-freeze   = ARGV.any? { |option| %w(--freeze -f).include?(option) }
-
-app_path = ARGV.first
-
-require File.dirname(__FILE__) + '/../lib/rails_generator'
-
-require 'rails_generator/scripts/generate'
-Rails::Generator::Base.use_application_sources!
-Rails::Generator::Scripts::Generate.new.run(ARGV, :generator => 'app')
-
-Dir.chdir(app_path) { `rake rails:freeze:gems`; puts "froze" } if freeze
+require File.dirname(__FILE__) + '/../lib/generator/generators/app'
+Rails::Generators::App.start

railties/lib/generator/base.rb

@@ -27,7 +27,7 @@ module Rails
           klass_name.gsub!(/^Rails::Generators::/, '')
           klass_name.gsub!(/([A-Z]+)([A-Z][a-z])/,'\1_\2')
           klass_name.gsub!(/([a-z\d])([A-Z])/,'\1_\2')
-          File.join(File.dirname(__FILE__), 'templates', klass_name.downcase)
+          File.expand_path(File.join(File.dirname(__FILE__), 'templates', klass_name.downcase))
         end
       end
 

railties/lib/generator/generators/app.rb

@@ -2,7 +2,6 @@ require File.dirname(__FILE__) + '/../base'
 require 'rbconfig'
 require 'digest/md5' 
 require 'active_support/secure_random'
-require 'rails/version'
 
 module Rails::Generators
   class App < Base
@@ -48,7 +47,9 @@ module Rails::Generators
       self.root = File.expand_path(app_path, root)
       empty_directory '.'
 
-      app_name # Sets the app name
+      app_name    # Sets the app name
+      source_root # Sets the source root
+
       FileUtils.cd(root)
     end