Subdomain_fu rewriting wrong with tld size 2?

I have a website on a demo server at:

I have a Rails app with subdomain_fu. I’ve verified it’s running in the
right environment and set the TLD Size to “2” so I can have:
* (for users’ customized landing pages)

This works great on my local computer with “myapp.local” and

but on my dev server, I’m getting URLs like

and it’s prepending ‘/myapp/’ to all stylesheet and javascript includes,
causing them to fail

I’ve googled everywhere on this. Any ideas?