# controller

class StaticController < ApplicationController

	def compare_passwords
    respond_to do |type|
      type.js do
        render :update do |page|
  				page.replace_html 'password_match', params[:password] == params[:password_confirmation] ? 'Passwords match!' : 'Passwords do not match...'
    		end
    	end
    end
  end

end

# view

<%= start_form_tag :action => 'register' %>
<p>Password: <%= password_field_tag 'password' %></p>

<p>Confirm Password: <%= password_field_tag 'password_confirmation' %> <span id="password_match"></span></p>

<%= observe_field 'password_confirmation', {
    :url => { :action => 'compare_passwords' }, :frequency => 1,
    :with => "'password_confirmation=' + encodeURIComponent(value) + '&password=' + $F('password')" } %>

<p><%= submit_tag 'Register!' %></p>
<%= end_form_tag %>