1. Depends on the project. Lots of small things, and even some big things, are labors of love - done in spare time for little or no reward, just a chance to put something out there and make the world a little better place. Or a chance to get your name out there.
Bigger projects like Linux and Rails are funded by companies who depend on them. In exchange, they get a degree of control over the platform their business is built upon, name recognition, and goodwill from the community.
Since you mentioned Rails, I guess 37 Signals is a great example of this. They built Rails to help build Basecamp, and they've gone on to build a thriving business from other Rails-based apps. They're also pretty much synonymous with Rails, which no doubt helps them land outside development work.
2. The basic answer is "no". "Acquiring" an open source project wouldn't negate the licensing terms of previous releases. Even if a company managed to make future versions of a project closed-source somehow, the community would be free to fork the most recent code and continue building their own version under an open source license.