The problem in a nutshell is that in development mode we\'d make changes to CSS or JS files but would always get cached/old versions of these files. Nothing I did had any effect
The reason the asset precompilation does not work could well be, that the Heroku ENV vars are not present on slug compilation (deploy) as stated here:
http://devcenter.heroku.com/articles/rails31_heroku_cedar
There is an (experimental) way to enable the ENV vars during deploy for exactly this reason, find information here:
http://devcenter.heroku.com/articles/labs-user-env-compile
Hope this helps.