Sean, the problem with the whole "universe is expanding into something" idea is that, we would just so happen to be at the exact center of where it all started. Everything is moving away from us. But it's not just that. Everything is moving away from us in such a way that, were you an observer at any other point, everything would be moving away from you in exactly the same manner. All points see the separation in the same way, which could in theory be done with a universe expanding into something, but it's highly unlikely.
There's also other proof; like cosmic background radiation. Originally, when that stuff was produced from the mess of particles that were left over after the big bang, it was extremely high-frequency radiation. However, over time, the space expanding out beneath it has lengthened the waves. So where we originally had X-rays and gamma rays, we now have microwaves. Not because the waves lost any of their energy, but because of the space being pulled out from under their feet.
As to why our rulers do actually stay the same length, allowing us to notice the expansion, it's because of gravity. Gravity has the power to warp space, or in our case hold it together; at least locally. So our galaxy isn't expanding, because the massive gravity of all the stars is roughly keeping the space together. Actually, the space in our local galactic supercluster isn't expanding much either; the combined mass is enough to hold the "local" space together, as it were.
However, the distances between galactic superclusters is so incredibly immense that gravity(which drops off at a crazy rate as distance increases) just can't hold it all together. So, superclusters spread apart, as the space between them stretches. The relative motion of the galaxies in the superclusters is nothing compared to the motion of the superclusters themselves, so they appear to move as one. Eventually, some of the most distance superclusters will accelerate beyond the speed of light (possible only due to space-stretching effects) and be lost from the visible universe. On the order of hundreds of billions of years from now, all we'll be able to see is our local galactic supercluster.