Answering myself here. This is the problem line:

result = stylesheet.apply(xml_doc, {:root => "ROOT", :back => "BACK"})

and this is the corrected line.

result = stylesheet.apply(xml_doc, {:root => "'ROOT'", :back => "'BACK'"})

Note that "ROOT" has become "'ROOT'". That is the word ROOT wrapped in 's and 
then wrapped in "s