meta-oe from OpenEmbedded repo seems to be a lot larger than one supplied with intel iot layer, but maybe you are referring to a different intel layer?
As for ruby, it compiles fine, but agree that it is unproductive to rebuild image every time you need to add something to it. The solution seems to be Yocto Project Development Manual but I didn't play with it yet. Anybody tried it?
If you have ability to compile sources on Galileo, that's by far the easiest way (unfortunately my image doesn't have compilers on board). Where did you get your image from?
As for creating a new recipe, here is a good read Yocto Project Development Manual