As Texas officials warned residents to prepare for the worst as Hurricane Rita (search) and her 125 mph winds prepared to come ashore, rainwater from the storm caused more flooding in New Orleans Friday just as the devastated city was drying up from Hurricane Katrina (search).

"Our worst fears came true. The levee will breach if we keep on the path we are on right now, which will fill the area that was flooded earlier," said Maj. Barry Guidry with the Georgia National Guard, noting that the water was rising about three inches a minute.

In the hard-hit but largely empty Ninth Ward, the water gushed through gaps at least 100 feet wide and was soon waist-deep in the streets. Water 6 to 8 inches deep was also rushing into homes in the Gentilly neighborhood, south of the University of New Orleans.

However, officials with the Army Corps of Engineers said there was no immediate indication the rest of New Orleans was in danger from the flooding.

By Friday, Rita had veered slightly east Friday and was headed about 75 miles east of Houston as cars crammed with evacuees jammed major arteries leading away from the Texas coast. In the afternoon it was downgraded from a Category 4 storm to a Category 3, and was expected to come ashore early Saturday along the upper Texas-Louisiana coast on a course that could spare Houston and nearby Galveston a direct hit.

But it could plow instead into Beaumont and Port Arthur, crippling the heart of the nation's petrochemical industry.

"It's a great test for the people of our state," Texas Gov. Rick Perry said Friday. "But we're going to get through this ... Be calm, be strong, say a prayer for Texas."

Texas' emergency management coordinator, Jack Colley, predicted Rita would destroy nearly 5,700 homes in the state and cause $8.2 billion in damage.

In New Orleans, water breached two levees and was cascading into one of the city's lowest-lying neighborhoods. Officials with the Army Corps of Engineers said other levees appeared secure, including those breached during Katrina, but there were leaks.

Mark Sloan of the urban search and rescue division of the Federal Emergency Management Agency told FOX News that he was "quite concerned" about the flooding in the Ninth Ward but said rescue efforts in the area were completed Thursday so he's confident there are no people in danger. "Everybody just needs to stay out of here," he added.

Tropical storm winds and rain were also expected in New Orleans — a city devastated by Hurricane Katrina almost four weeks ago.

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President Bush planned to visit his home state but canceled at the last moment. The White House said he did not want to slow down the storm preparations.

Earlier, Bush said he wanted to observe operations in Texas but not interfere.

"We're now facing another big storm," he said. "Our job is to prepare for and assist state and local people to save lives and help these people get back on their feet." Bush added: "There will be no risk of me getting in the way. What I will do is observe."

At 5 p.m. EDT, Rita was centered about 155 miles east-southeast of Galveston, moving northwest at near 12 mph, and forecasters said it could weaken further become coming ashore.

Its hurricane-force winds extended up to 85 miles from the center, and its tropical storm-force winds reached outward 205 miles, meaning Houston and Galveston might not feel Rita's full fury but could still get battered.

The first bands of rain were expected before nightfall Friday. Forecasters warned of the possibility of a storm surge of 15 to 20 feet, battering waves and rain of up to 20 inches, with more than 25 inches possible over the next several days as the storm moves inland into Texas and Louisiana and wrings itself out.

Hurricane warnings were in effect from Sargent, Texas, to Morgan City, La., and the National Hurricane Center forecast the storm would make landfall as a "dangerous hurricane of at least Category 3 intensity."

More than 3 million people along the Texas and Louisiana coasts were urged to get out of the way of Rita, setting off an unprecedented exodus that brought traffic to a standstill across the Houston metropolitan area. The state escorted tanker trucks full of gas to empty stations in small towns along the way. And National Guard trucks delivered gasoline to drivers who ran out.

Still, many cars overheated and ran out of gas in 10- and 12-hour traffic jams. Some drivers gave up and turned around and went home.

"It can't get much worse, 100 yards an hour," fumed Willie Bayer, 70. "It's frustrating bumper-to-bumper."

Harris County Judge Robert Eckels, the chief executive for the county surrounding Houston, told residents who had not left yet to stay where they were for the storm.

Tragedy struck the area early on, when a bus carrying nursing home evacuees caught fire and exploded.

The bus fire took place in a traffic jam on Interstate 45 near Wilmer, southeast of Dallas. The vehicle was rocked by explosions and engulfed in flames that reduced it to a blackened, burned-out shell.

Early indications were that the bus it caught fire because of mechanical problems, then passengers' oxygen tanks started exploding, Dallas County Sheriff's Department spokesman Don Peritz said. As many as 24 people were reported killed.

Two communities that may bear the brunt of the storm are Beaumont, which is a petrochemical, shipbuilding and port city of about 114,000; and Port Arthur, a city of about 58,000 that's home to industries including oil, shrimping and crawfishing.

Kandy Huffman had no way to leave, and she pushed her broken-down car down the street to her home with plans to ride out the storm in an otherwise-deserted Port Arthur, where the streetlights were turned off and stores were boarded up.

"This isn't my first rodeo. All you can do is pray for best," she said as a driving rain started to fall. "We're surrounded by the people we love. Even if we have to all cuddle up, we know where everybody is."

The military sent cargo planes to evacuate thousands of patients and others from Beaumont. Downtown Beaumont was all but deserted, with buildings boarded up and practically nothing moving but windblown plastic bags. On the horizon, covered in gray clouds, refinery torches belched black smoke.

Sherry Gates, whose husband is maintenance director of the Beaumont Hotel, planned to stay behind to protect the place from looters. The hotel, she said, can withstand whatever Rita brings. "This old girl," she said, "will see us out."

The Texas and Louisiana coast is home to the nation's biggest concentration of oil refineries. Environmentalists warned of the possibility of a toxic spill from the 87 chemical plants and petroleum installations that represent more than one-fourth of U.S. refining capacity.

Petrochemical plants began shutting and hundreds of workers were evacuated from offshore oilrigs. Perry said state officials had been in contact with plants that are "taking appropriate procedures to safeguard their facilities."

The 'Big, Bad Storm'

Texas officials scrambled to reroute several inbound highways to accommodate outbound traffic, but many people were waiting so long they ran out of gas and were forced to park.

"We know you're out there," Houston Mayor Bill White said of the congestion that extended well into Louisiana. "We understand there's been fuel shortages."

During a brief 8 a.m. EDT presser Friday morning, White commended the efforts of evacuees to get to safety.

"It is better to be safe than sorry and I applaud the efforts of people to get out of the way and protect their own lives," he said.

Texas Army National Guard trucks were escorted by police to directly provide motorists with gasoline. The state was also working to get more than 200,000 gallons of gas to fuel-starved stations in the Houston area.

"I think Governor Perry and his team has done a great job," Sen. John Cornyn, R-Texas, told FOX News Friday morning. "We have a plan and they are executing the plan. Obviously it's tough on the people who are affected but anytime you have to evacuate literally millions of people from an area, there's going to be problems."

"We are doing, I think, about as well as can be done" to prepare for "this big and bad storm," Cornyn added.

Traffic on some highways was backed up for 100 miles in what White called "one of the largest mass evacuations in American history."

"Katrina. It's scared everyone," said Dianna Soileau, 29, who was fleeing the refinery town of Texas City with her husband and two children. "We don't want to be the same thing."

The usually bustling tourist island of Galveston — rebuilt after as many as 12,000 people died in a 1900 hurricane — was all but abandoned, with at least 90 percent of its 58,000 residents cleared out.

Mindful of Katrina's missteps, the federal response for Rita included the placing of disaster response teams in Houston, helicopters in Florida and a fleet of C-5 transport planes in San Antonio for evacuation duty. Five Navy ships, including two amphibious vessels with 800 Marines, were in the gulf awaiting orders.

New Orleans Braces for Another Hit

The Army Corps of Engineers added sandbags to shore up New Orleans' levees and installed 60-foot sections of metal across some of the city's canals to protect against storm surges.

About 5,000 soldiers and National Guard members remain in the city, along with about 1,400 police officers. "We should be in pretty good shape from a law enforcement standpoint as we move forward," said Mayor Ray Nagin.

Rita brought steady rain to New Orleans for the first time since Katrina. The forecast was for 3 to 5 inches in the coming days — dangerously close to the amount engineers said could send floodwaters pouring back into recently dry neighborhoods.

Sally Forman, an aide to Mayor Ray Nagin, said officials knew the levees were compromised but believed the Ninth Ward had been cleared of residents. "I wouldn't imagine there's one person down there," Forman said.

In southwestern Louisiana, which was on the vulnerable east side of Rita and expected to get the brunt of a 20-foot storm surge, water was already lapping over roads in coastal Lafourche and Terrebonne parishes by midday. High winds flattened sugar cane fields, knocked over old live oaks and lashed the low-lying landscape with driving winds.

In Lake Charles, home to the nation's 12th-largest seaport and refineries run by ConocoPhillips, ExxonMobil, Citgo and Shell, nearly all 70,000 residents had evacuated. Several riverboat casinos that mostly serve tourists from Texas also closed ahead of the storm.

"We see these storms a little differently after Katrina," said city administrator Paul Rainwater. "We all realize that no matter how safe you feel ... you have to take it seriously, you have to plan."

Louisiana Gov. Kathleen Blanco said over 90 percent of residents in southwestern parishes, about 150,000 people, had evacuated. For those who had not, she issued a warning: "You need to find a safe place to be. It is not safe to find yourself stranded on the highway. Get to the highest ground or the highest building in your area."

Some residents of southwest Louisiana were headed to a shelter in Lafayette, joining evacuees from Hurricane Katrina who had been there nearly a month.

"I am thankful for my life and that we are all safe," said Blanche Edgarson, 53, of Plaquemines Parish, an area that was devastated by Katrina. "But I'm very depressed, and I don't know where we will go from here."

Because of the approaching storm, authorities called off the search for bodies from Katrina, and the death toll across the Gulf Coast stood at 1,079, including 841 in Louisiana.

Oliver Lucius left New Orleans with his family after Katrina and was beginning to build a life in Corpus Christi. He and his wife had found jobs and their children were enrolled in local schools. Then came Rita.

"It was just settling in that I was there for the hurricane, and then I came here," said Ariel Lucius, 13, Oliver's daughter. "Now it seems like a dream."

FOX News' Jeff Goldblatt and The Associated Press contributed to this report.