For the redirect, I think that https setting should work, but I haven’t tried it. I know for a straight rails application, configuring nginx or Rails itself to always redirect to https just works, provided that the URL being redirected to is the ELB’s URL, not your server’s. In general, that should be true for your setup–the URL of your service is now the ELB, not your EC2 instance.
As for upgrades “breaking” ELB, I think you’re just not being patient. ELB requires, by default, 10 “good” hits on its test URL before it will resume thinking of an instances as “good”.