diff --git a/actionmailer/lib/action_mailer/railtie.rb b/actionmailer/lib/action_mailer/railtie.rb
index b05d21ae5d..94d9eaf81b 100644
--- a/actionmailer/lib/action_mailer/railtie.rb
+++ b/actionmailer/lib/action_mailer/railtie.rb
@@ -21,8 +21,7 @@ module ActionMailer
 
     initializer "action_mailer.view_paths" do |app|
       # TODO: this should be combined with the logic for default config.action_mailer.view_paths
-      view_path = ActionView::PathSet.type_cast(app.config.view_path, app.config.cache_classes)
-      ActionMailer::Base.template_root = view_path if ActionMailer::Base.view_paths.blank?
+      ActionMailer::Base.template_root = [] if ActionMailer::Base.view_paths.blank?
     end
   end
 end
\ No newline at end of file
diff --git a/actionpack/lib/action_controller/railtie.rb b/actionpack/lib/action_controller/railtie.rb
index ee94bf8364..621dd9373c 100644
--- a/actionpack/lib/action_controller/railtie.rb
+++ b/actionpack/lib/action_controller/railtie.rb
@@ -29,8 +29,7 @@ module ActionController
     # set to use Configuration#view_path.
     initializer "action_controller.initialize_framework_views" do |app|
       # TODO: this should be combined with the logic for default config.action_controller.view_paths
-      view_path = ActionView::PathSet.type_cast(app.config.view_path, app.config.cache_classes)
-      ActionController::Base.view_paths = view_path if ActionController::Base.view_paths.blank?
+      ActionController::Base.view_paths = [] if ActionController::Base.view_paths.blank?
     end
 
   end
diff --git a/railties/lib/rails/application.rb b/railties/lib/rails/application.rb
index 898dd0ad9b..9be9584873 100644
--- a/railties/lib/rails/application.rb
+++ b/railties/lib/rails/application.rb
@@ -1,4 +1,4 @@
-require "fileutils"
+require 'fileutils'
 
 module Rails
   class Application < Engine
@@ -6,7 +6,7 @@ module Rails
 
     class << self
       alias    :configure :class_eval
-      delegate :initialize!, :load_tasks, :load_generators, :to => :instance
+      delegate :initialize!, :load_tasks, :load_generators, :root, :to => :instance
 
       private :new
       def instance
@@ -14,11 +14,11 @@ module Rails
       end
 
       def config
-        @config ||= Configuration.new(root)
+        @config ||= Configuration.new(original_root)
       end
 
-      def root
-        @root ||= find_root_with_file_flag("config.ru", Dir.pwd)
+      def original_root
+        @original_root ||= find_root_with_file_flag("config.ru", Dir.pwd)
       end
 
       def inherited(base)
@@ -122,16 +122,16 @@ module Rails
       app.call(env)
     end
 
-    initializer :build_middleware_stack, :after => :load_application_initializers do
-      app
-    end
-
     initializer :add_builtin_route do |app|
       if Rails.env.development?
         app.route_configuration_files << File.join(RAILTIES_PATH, 'builtin', 'routes.rb')
       end
     end
 
+    initializer :build_middleware_stack, :after => :load_application_initializers do
+      app
+    end
+
     # Fires the user-supplied after_initialize block (Configuration#after_initialize)
     initializer :after_initialize, :after => :build_middleware_stack do
       config.after_initialize_blocks.each do |block|
diff --git a/railties/lib/rails/configuration.rb b/railties/lib/rails/configuration.rb
index 77248f2611..9176809dbd 100644
--- a/railties/lib/rails/configuration.rb
+++ b/railties/lib/rails/configuration.rb
@@ -70,7 +70,8 @@ module Rails
   end
 
   class Engine::Configuration < Railtie::Configuration
-    attr_reader :root
+    attr_reader   :root
+    attr_accessor :eager_load_paths, :load_once_paths, :load_paths
 
     def initialize(root)
       @root = root
@@ -79,14 +80,15 @@ module Rails
 
     def paths
       @paths ||= begin
-        paths = Rails::Application::Root.new(root)
+        paths = Rails::Application::Root.new(@root)
         paths.app                 "app",             :load_path => true
         paths.app_glob            "app/*",           :load_path => true, :eager_load => true
-        paths.app.controllers     "app/controllers"
+        paths.app.controllers     "app/controllers",                     :eager_load => true
         paths.app.metals          "app/metal"
         paths.app.views           "app/views"
         paths.lib                 "lib",             :load_path => true
         paths.config              "config"
+        paths.config.environment  "config/environments/#{Rails.env}.rb"
         paths.config.environments "config/environments", :glob => "#{Rails.env}.rb"
         paths.config.initializers "config/initializers"
         paths.config.locales      "config/locales"
@@ -95,6 +97,10 @@ module Rails
       end
     end
 
+    def root=(value)
+      @root = paths.path = Pathname.new(value).expand_path
+    end
+
     def eager_load_paths
       @eager_load_paths ||= paths.eager_load
     end
@@ -106,6 +112,10 @@ module Rails
     def load_paths
       @load_paths ||= paths.load_paths
     end
+
+    def controller_paths
+      paths.app.controllers.to_a.uniq
+    end
   end
 
   class Configuration < Engine::Configuration
@@ -115,9 +125,7 @@ module Rails
                   :preload_frameworks, :reload_plugins, :serve_static_assets,
                   :time_zone, :whiny_nils
 
-    attr_writer :cache_store, :controller_paths,
-                :database_configuration_file,
-                :i18n, :log_level, :log_path
+    attr_writer :cache_store, :controller_paths, :i18n, :log_level
 
     def initialize(*)
       super
@@ -134,7 +142,7 @@ module Rails
     def paths
       @paths ||= begin
         paths = super
-        paths.builtin_controller builtin_directories, :eager_load => true
+        paths.app.controllers << builtin_directories
         paths.config.database    "config/database.yml"
         paths.log                "log/#{Rails.env}.log"
         paths.tmp                "tmp"
@@ -144,7 +152,7 @@ module Rails
 
         if File.exists?("#{root}/test/mocks/#{Rails.env}")
           ActiveSupport::Deprecation.warn "\"RAILS_ROOT/test/mocks/#{Rails.env}\" won't be added " <<
-            "automatically to load paths anymore in next releases."
+            "automatically to load paths anymore in future releases"
           paths.mocks_path  "test/mocks/#{Rails.env}", :load_path => true
         end
 
@@ -230,18 +238,6 @@ module Rails
       paths.config.log.to_a.first
     end
 
-
-
-    # TODO Router needs this, but this wouldn't work with engines.
-    # There is a high chance of plugins routes to be broken.
-    def controller_paths
-      @controller_paths ||= begin
-        paths = [File.join(root, 'app', 'controllers')]
-        paths.concat builtin_directories
-        paths
-      end
-    end
-
     def cache_store
       @cache_store ||= begin
         if File.exist?("#{root}/tmp/cache/")
diff --git a/railties/lib/rails/engine.rb b/railties/lib/rails/engine.rb
index 21c78036bd..a0139f9983 100644
--- a/railties/lib/rails/engine.rb
+++ b/railties/lib/rails/engine.rb
@@ -1,18 +1,19 @@
 require 'active_support/core_ext/module/delegation'
 
 module Rails
-  # TODO Move I18n and views path setup
+  # TODO Move I18n here
+  # TODO Set routes namespaces
   class Engine < Railtie
 
     class << self
       attr_accessor :called_from
 
-      def root
-        @root ||= find_root_with_file_flag("lib")
+      def original_root
+        @original_root ||= find_root_with_file_flag("lib")
       end
 
       def config
-        @config ||= Configuration.new(root)
+        @config ||= Configuration.new(original_root)
       end
 
       def inherited(base)
@@ -20,6 +21,7 @@ module Rails
           call_stack = caller.map { |p| p.split(':').first }
           File.dirname(call_stack.detect { |p| p !~ %r[railties/lib/rails|rack/lib/rack] })
         end
+
         super
       end
 
@@ -33,7 +35,7 @@ module Rails
           root_path = parent != root_path && parent
         end
 
-        root = File.exist?("#{root_path}/flag") ? root_path : default
+        root = File.exist?("#{root_path}/#{flag}") ? root_path : default
 
         raise "Could not find root path for #{self}" unless root
 
@@ -43,8 +45,8 @@ module Rails
       end
     end
 
-    delegate :root, :config, :to => :'self.class'
-    delegate :middleware,    :to => :config
+    delegate :config, :to => :'self.class'
+    delegate :middleware, :root, :to => :config
 
     # Add configured load paths to ruby load paths and remove duplicates.
     initializer :set_load_path, :before => :container do
@@ -57,10 +59,11 @@ module Rails
     initializer :set_autoload_paths, :before => :container do
       require 'active_support/dependencies'
 
-      ActiveSupport::Dependencies.load_paths = expand_load_path(config.load_paths)
+      ActiveSupport::Dependencies.load_paths      = expand_load_path(config.load_paths)
       ActiveSupport::Dependencies.load_once_paths = expand_load_path(config.load_once_paths)
 
-      extra = ActiveSupport::Dependencies.load_once_paths - ActiveSupport::Dependencies.load_paths
+      extra = ActiveSupport::Dependencies.load_once_paths -
+              ActiveSupport::Dependencies.load_paths
 
       unless extra.empty?
         abort <<-end_error
@@ -73,15 +76,24 @@ module Rails
       config.load_once_paths.freeze
     end
 
-    initializer :load_application_initializers do
-      Dir["#{root}/config/initializers/**/*.rb"].sort.each do |initializer|
-        load(initializer)
-      end
+    # Routing must be initialized after plugins to allow the former to extend the routes
+    initializer :add_routing_files do |app|
+      routes = select_existing(config.paths.config.routes)
+      app.route_configuration_files.concat(routes)
     end
 
-    # Routing must be initialized after plugins to allow the former to extend the routes
-    initializer :initialize_routing do |app|
-      app.route_configuration_files.concat(config.paths.config.routes.to_a)
+    initializer :add_view_paths do
+      views = select_existing(config.paths.app.views)
+      ActionController::Base.view_paths.concat(views) if defined? ActionController
+      ActionMailer::Base.view_paths.concat(views)     if defined? ActionMailer
+    end
+
+    initializer :load_application_initializers do
+      select_existing(config.paths.config.initializers).each do |initializers|
+        Dir["#{initializers}/**/*.rb"].sort.each do |initializer|
+          load(initializer)
+        end
+      end
     end
 
     # Eager load application classes
@@ -100,6 +112,10 @@ module Rails
 
   private
 
+    def select_existing(paths)
+      paths.to_a.select { |path| File.exists?(path) }.uniq
+    end
+
     def expand_load_path(load_paths)
       load_paths.map { |path| Dir.glob(path.to_s) }.flatten.uniq
     end
diff --git a/railties/lib/rails/railtie.rb b/railties/lib/rails/railtie.rb
index a7f52b25e4..5b97fabe40 100644
--- a/railties/lib/rails/railtie.rb
+++ b/railties/lib/rails/railtie.rb
@@ -14,6 +14,7 @@ module Rails
         @@plugins << base unless abstract_railtie?(base)
       end
 
+      # This should be called railtie_name and engine_name
       def plugin_name(plugin_name = nil)
         @plugin_name ||= name.demodulize.underscore
         @plugin_name = plugin_name if plugin_name
diff --git a/railties/test/application/configuration_test.rb b/railties/test/application/configuration_test.rb
index 6968e87986..2c842eb096 100644
--- a/railties/test/application/configuration_test.rb
+++ b/railties/test/application/configuration_test.rb
@@ -34,9 +34,9 @@ module ApplicationTests
       add_to_config <<-RUBY
         config.root = '#{new_app}'
       RUBY
-
+    
       use_frameworks []
-
+    
       require "#{app_path}/config/environment"
       assert_equal Pathname.new(new_app), Rails.application.root
     end