How do I convert an existing Rails 3 Application into an Engine?

How can I convert the Forum application I've been developing into a Rails Engine, so that it may be embedded inside other applications?

What should I add, keep, or remove? Should I offer a way to integrate the models? How do I set up routes and user configuration? How do I package it into a Gem? What should I watch out for?

After reading the articles and the documentation, I managed to narrow down my questions:

• Should I namespace the models? That is, should I keep them in my Engine's module and in the app/models/engine folder?
• What configuration files in config should I keep around?
• What about the public folder? In Rails 3.1, stylesheets and javascripts were moved to the app/assets folder, which solved this problem, but how do I achieve the same effect in Rails 3.0?