Do not overwrite _railtie method on namespace while creating isolated engine or application.

In order to run Engine as standalone application, you will need
Rails::Application instance in the same namespace that engine
one. It's very important to leave _railtie bound to whatever
used "namespace" method first.

railties/lib/rails/engine.rb

@@ -333,8 +333,12 @@ module Rails
       def namespace(mod)
         engine_name(generate_railtie_name(mod))
 
-        _railtie = self
         name = engine_name
+        self.routes.default_scope = {:module => name}
+        self.namespaced = true
+
+        unless mod.respond_to?(:_railtie)
+          _railtie = self
           mod.singleton_class.instance_eval do
             define_method(:_railtie) do
               _railtie
@@ -344,10 +348,7 @@ module Rails
               "#{name}_"
             end
          end
-
-        self.routes.default_scope = {:module => name}
-
-        self.namespaced = true
+        end
       end
 
       def namespaced?

railties/test/railties/engine_test.rb

@@ -643,5 +643,25 @@ module RailtiesTest
       Bukkits::Engine.load_seed
       assert Bukkits::Engine.config.bukkits_seeds_loaded
     end
+
+    test "using namespace more than once on one module should not overwrite _railtie method" do
+      @plugin.write "lib/bukkits.rb", <<-RUBY
+        module AppTemplate
+          class Engine < ::Rails::Engine
+            namespace(AppTemplate)
+          end
+        end
+      RUBY
+
+      add_to_config "namespace AppTemplate"
+
+      app_file "config/routes.rb", <<-RUBY
+        AppTemplate::Application.routes.draw do end
+      RUBY
+
+      boot_rails
+
+      assert_equal AppTemplate._railtie, AppTemplate::Engine
+    end
   end
 end