Help with HTTP Intercepting Proxy in Ruby?

Question

I have the beginnings of an HTTP Intercepting Proxy written in Ruby:

require 'socket'                # Get sockets from stdlib

server = TCPServer.open(8080)   # Socket to listen on port 8080
loop {                          # Servers run forever
  Thread.start(server.accept) do |client|
    puts "** Got connection!"
    @output = ""
    @host = ""
    @port = 80
    while line = client.gets
        line.chomp!
        if (line =~ /^(GET|CONNECT) .*(\.com|\.net):(.*) (HTTP\/1.1|HTTP\/1.0)$/)
            @port = $3
        elsif (line =~ /^Host: (.*)$/ && @host == "")
            @host = $1
        end
        print line + "\n"
        @output += line + "\n"
        # This *may* cause problems with not getting full requests, 
        # but without this, the loop never returns.
        break if line == ""
    end
    if (@host != "")
        puts "** Got host! (#{@host}:#{@port})"
        out = TCPSocket.open(@host, @port)
        puts "** Got destination!"
        out.print(@output)
        while line = out.gets
            line.chomp!
            if (line =~ /^<proxyinfo>.*<\/proxyinfo>$/)
                # Logic is done here.
            end
            print line + "\n"
            client.print(line + "\n")
        end
        out.close
    end
    client.close
  end
}

This simple proxy that I made parses the destination out of the HTTP request, then reads the HTTP response and performs logic based on special HTML tags. The proxy works for the most part, but seems to have trouble dealing with binary data and HTTPS connections.

How can I fix these problems?