I decided to download rubby 1.8.7 sources, compile and install.


root@raspberrypi:~# ruby --version
ruby 1.8.7 (2012-02-08 patchlevel 358) [armv6l-linux]
root@raspberrypi:~# localtunnel -k /home/pi/.ssh/id_rsa.pub 80
/var/lib/gems/1.9.1/gems/net-ssh-2.6.6/lib/net/ssh/transport/packet_stream.rb:103:in `block in next_packet': connection closed by remote host (Net::SSH::Disconnect)
        from /var/lib/gems/1.9.1/gems/net-ssh-2.6.6/lib/net/ssh/transport/packet_stream.rb:93:in `loop'
        from /var/lib/gems/1.9.1/gems/net-ssh-2.6.6/lib/net/ssh/transport/packet_stream.rb:93:in `next_packet'
        from /var/lib/gems/1.9.1/gems/net-ssh-2.6.6/lib/net/ssh/transport/session.rb:172:in `block in poll_message'
        from /var/lib/gems/1.9.1/gems/net-ssh-2.6.6/lib/net/ssh/transport/session.rb:167:in `loop'
        from /var/lib/gems/1.9.1/gems/net-ssh-2.6.6/lib/net/ssh/transport/session.rb:167:in `poll_message'
        from /var/lib/gems/1.9.1/gems/net-ssh-2.6.6/lib/net/ssh/transport/session.rb:152:in `next_message'
        from /var/lib/gems/1.9.1/gems/net-ssh-2.6.6/lib/net/ssh/transport/kex/diffie_hellman_group_exchange_sha1.rb:45:in `get_parameters'
        from /var/lib/gems/1.9.1/gems/net-ssh-2.6.6/lib/net/ssh/transport/kex/diffie_hellman_group1_sha1.rb:118:in `generate_key'
        from /var/lib/gems/1.9.1/gems/net-ssh-2.6.6/lib/net/ssh/transport/kex/diffie_hellman_group1_sha1.rb:51:in `initialize'
        from /var/lib/gems/1.9.1/gems/net-ssh-2.6.6/lib/net/ssh/transport/algorithms.rb:348:in `new'
        from /var/lib/gems/1.9.1/gems/net-ssh-2.6.6/lib/net/ssh/transport/algorithms.rb:348:in `exchange_keys'
        from /var/lib/gems/1.9.1/gems/net-ssh-2.6.6/lib/net/ssh/transport/algorithms.rb:196:in `proceed!'
        from /var/lib/gems/1.9.1/gems/net-ssh-2.6.6/lib/net/ssh/transport/algorithms.rb:187:in `send_kexinit'
        from /var/lib/gems/1.9.1/gems/net-ssh-2.6.6/lib/net/ssh/transport/algorithms.rb:142:in `accept_kexinit'
        from /var/lib/gems/1.9.1/gems/net-ssh-2.6.6/lib/net/ssh/transport/session.rb:189:in `block in poll_message'
        from /var/lib/gems/1.9.1/gems/net-ssh-2.6.6/lib/net/ssh/transport/session.rb:167:in `loop'
        from /var/lib/gems/1.9.1/gems/net-ssh-2.6.6/lib/net/ssh/transport/session.rb:167:in `poll_message'
        from /var/lib/gems/1.9.1/gems/net-ssh-2.6.6/lib/net/ssh/transport/session.rb:204:in `block in wait'
        from /var/lib/gems/1.9.1/gems/net-ssh-2.6.6/lib/net/ssh/transport/session.rb:202:in `loop'
        from /var/lib/gems/1.9.1/gems/net-ssh-2.6.6/lib/net/ssh/transport/session.rb:202:in `wait'
        from /var/lib/gems/1.9.1/gems/net-ssh-2.6.6/lib/net/ssh/transport/session.rb:81:in `initialize'
        from /var/lib/gems/1.9.1/gems/net-ssh-2.6.6/lib/net/ssh.rb:186:in `new'
        from /var/lib/gems/1.9.1/gems/net-ssh-2.6.6/lib/net/ssh.rb:186:in `start'
        from /var/lib/gems/1.9.1/gems/net-ssh-gateway-1.2.0/lib/net/ssh/gateway.rb:74:in `initialize'
        from /var/lib/gems/1.9.1/gems/localtunnel-0.3/lib/localtunnel/tunnel.rb:44:in `new'
        from /var/lib/gems/1.9.1/gems/localtunnel-0.3/lib/localtunnel/tunnel.rb:44:in `start_tunnel'
        from /var/lib/gems/1.9.1/gems/localtunnel-0.3/bin/localtunnel:47:in `<top (required)>'
        from /usr/local/bin/localtunnel:23:in `load'
        from /usr/local/bin/localtunnel:23:in `<main>'
root@raspberrypi:~#

Problem is still the same.