I just asked the LilyPond documentation editor (also known as "my brother") and LilyPond isn't completely written in Lisp; it's a "rather unholy" combination of Scheme and C++.
This is, however, still an improvement on the early days, when it used TeX as well...
I'm not sure why they bothered with C++ at all. The essay says the parsing code is 6000 lines of C++. It seems that if they wrote the whole thing in Scheme, they would have gotten that way down, and then the parsing would have been extensible as well.