In my Post.rb model, I have default_scope :conditions => {:deleted => \'false\'}
But if I try to run Post.find(:all, :conditions => \"del
Scopes are meant to be composable, meaning you can combine a bunch of them and it effectively applies all the conditions. In this case ActiveRecord is just too naive to determine that the explicit condition should negate the first one. It just builds the query joining all the clauses with ANDs. For this reason default_scope has the most utility with the :order clauses which is not composable (in ActiveRecord 2.3's implementation anyway). There is more discussion here.
Also note that in Rails 3 ActiveRecord is using Arel for a lot of query construction which will greatly increase the power of ActiveRecord query generation while simplifying a lot of the internals. It's likely that with Arel will improve your situation. In the meantime I recommend not putting conditions in a default_scope unless there are rows that you really want to be invisible to your Rails app.