Because the Lite-C compiler is only half-conform with the ANSI-C standard, it shouldnt be that easy to integrate lua directly into LC. Additionally, binding functions directly to lua in ugly, boost::luabind should be used in combination with C++.

I used lua in some projects of mine, it's great for configuration and events aso. But writing a whole game with it? This will make you crazy because the language itself it crazy =) And please note, lua does not directly support OO features, these things are just some language hacks.

Python it a far better scripting language for big things like a complete game. Py directly supports OO features, the language itself offers more things and it has a great set of standard library