application.css not being served as an asset

Question

EDIT 4, 5 and 6

8 hours in, any more ideas are welcome :) Maybe this bug is already known and solved, but I get the behaviour I described in edit 2&

Answer 1

To keep things simple I like to use the .css.scss exstension and use:

li {
    background-image: image-url("logo_80px_80px.png");
}

Full reference can be found on Rails Guides under Section 2.2.2.