If you want to see how much better an ORM in ruby/C can be, look at datamapper http://datamapper.org. This is mainly used with merb. The new datamapper uses data_objects which has been completely rewritten with C underpinnings to be much more efficient than previous datamapper. I haven't seen any recent benchmarks against ActiveRecord. But I do believe the datamapper team met their goals of being faster.
In fact we, the core DM contributors, have spent very little time optimizing the library. Up until now we've been mostly focused on creating a clean API, and keeping the internals simplified. I would expect the gap to widen much further once the API stabilizes, and the spec coverage gets nearer 100% (it was in the low 90's last I checked).