Really? Our frontend servers handle 50 rps and cost $20 each and are nowhere near peak utilization. If anything ever needs scaling its the database. What level of traffic are you talking about?
I don’t want to second guess technical decisions I know nothing about but: no, Rails shouldn’t be streaming video. But 2k requests per second with mostly text content being shuffled around sounds absolutely doable with Rails. The cost benefit of easier development should definitely not be understated as well.
But that being said, the primary driver for tools should be what the developers know and ease of access finding developers who know this technology. If the city you work in mostly has PHP developers, PHP is a great choice. Similar for Java, Haskell, Lisp, etc. My point is that the tool ”Rails” definitely is adequate for this problem (minus streaming video...). Look at Shopify, Github or any other massive Rails app
If a Rails back-end streamed video, there wouldn't literally be a loop written in Ruby shoving bytes back and forth stored in Ruby arrays or buffers. It would be farmed off to something appropriate. You wouldn't necessarily want that machine to be doing it, using any middleware.