While this is true, you have to keep in mind, that all professional game engines (including Ogre, Torque and C4) use scripting as an additional tool besides their real programming language. They use scripting for prototyping and for level design or for fine tuning (like adapting an AI). But all core elements get programmed in the end. The reason is optimization, speed. AI as an example can "think" multi-threaded in background while the script can change parameters of this behaviour.

Scripting an entire larger scaled game can lead to problems like you can see when you watch current problems of the very ambitious and excellent Intense-X.
But it will be sufficient for smaller prototypes and casual games, as you can see from all these flash projects.