Ok, I found out the issue. After I extracted the Droid2Root to my Downloads folder, it created a subfolder Droid2Root under the Droid2Root folder, that's why it didn't recognize the Rage binary. Now I have another issue (sadness), I cannot change the working directory to where I put the Rage binary (cd /data/local/tmp), it says "cd: permission denied". See below:
computer:~ babetrang$ cd ~/Downloads/android-sdk-mac_x86/tools/
computer:tools babetrang$ ./adb devices
List of devices attached
040388900B01601D device
computer:tools babetrang$ ./adb push ~/Downloads/droid2root/rageagainstthecage-arm5.bin /data/local/tmp
402 KB/s (5392 bytes in 0.013s)
computer:tools babetrang$ ./adb shell
$ cd /data/local/tmp
cd: permission denied
$
computer:~ babetrang$ cd ~/Downloads/android-sdk-mac_x86/tools/
computer:tools babetrang$ ./adb devices
List of devices attached
040388900B01601D device
computer:tools babetrang$ ./adb push ~/Downloads/droid2root/rageagainstthecage-arm5.bin /data/local/tmp
402 KB/s (5392 bytes in 0.013s)
computer:tools babetrang$ ./adb shell
$ cd /data/local/tmp
cd: permission denied
$