klew's suggestion worked out for me. I have a fully featured admin backend and needed a lean and focus API app.
I ended up using the rails_api gem for the second app and created it under a separate user account.
I'm using postgres as my database.
Then I had to do the following:
edit database.yml to use the same database, username, password as the other app
rather than copy files I used ln -s
I linked schema.rb and any model.rb files that I wanted to use in the API.
At this point I was able to use rails console in the API app.
As I'm using the rails_api gem I was obviously missing routes. This is probably a good thing as I was able to manually create specific routes as required and not expose anything else to the web.
I do not do any migrations in the API app, everything except the odd linking of a model.rb file is done in my original app.
Seems to be working nicely, thanks Klew!