Interesting, I developed a very large kiosk platform in Lua and the experience was fantastic. I found the stack based C integration to be far preferable to any other FFI I've ever used. Also the whole complaint that Lua is somehow paradigm-less (whatever that means), is very strange. Nobody who worked on our system had an issue with that.
There are very few libraries for Lua and that's its main weakness. However, because the C interface is so awesome, that never really hurt in practice—at least for our application. For something like a web app it would be completely untenable.
Lack of a paradigm is likely part of why there aren't many libraries - it's as though there are multiple languages or dialects and you have to subdivide your potential audience when you choose one for your library.
There are very few libraries for Lua and that's its main weakness. However, because the C interface is so awesome, that never really hurt in practice—at least for our application. For something like a web app it would be completely untenable.