I can't respond on technical, as I haven't used TLC.

As to Apple's TOS (I can't seem to find TLC's), I'm pretty sure you can write a full-blown iOS app in Lua. You can already write a complete iOS game in Lua: http://www.anscamobile.com/corona/ . Around summer 2010 they changed their terms so that embedded, non-JIT languages are allowed, as long as all executed code is bundled in your application (not downloaded). Many apps already embedded lua. I don't think using TLC would affect an app's chances of being approved.