OK .. so Apple never came out and specifically said that you couldn't use Lua, but the terms of the iPhone developer license were such that incorporating an non-Apple language interpreter was in violation of the agreement.
Many claim that this clause was directed specifically at boxing out Flash, though Steve Jobs has indicated that it isn't only about Flash, but rather about maintaining a high quality experience with proven and tested technologies ... provided by Apple of course.
This caused quite a bit of outrage in the Lua community, specifically because Lua is already embedded in a number of iPhone applications and is a language designed to facilitate application extension through scripting.
Looks like a quiet change to the License Agreement was made at Apple's WWDC last week.
The good news is that this also opens things up for us to move forward with our evaluations of a Storyboard port for the iPhone platforms ... and just to be fair we're evaluating Android too =;-)
Thomas