>Can Rails easily handle more complex, mutli-table databases -- e.g., parent-child-grandchild or parent w/ multiple children or many-to-many w/ pivot table?

Yes. These are implemented using the has_one, has_many, belongs_to, and has_and_belongs_to_many declarations in the ActiveRecord ORM. Chapter 19 of Agile Web Development with Rails has a good discussion of how this works.

To take your exploration of Ruby and Rails forward, I'd recommend you look at some of the books I mention in the white paper, choose one or two that appeal to you, start reading, and then start playing. There is also a wealth of good resources and tutorials on the Web - http://rubyonrails.org/screencasts and http://railscasts.com/ are good places to start. A Web search will turn up many more.