Lua is an interpreted language and thus is inefficient and high-level. Don't use it. By the way, the PSP's graphics interface is very similar to OpenGL, so no problems there.
Suit yourself, but Lua is very meh. Hardly portable, not efficient, insecure, looks unprofessional, doesn't allow you to do certain interesting things that a lower level language could accomplish, and scares people away from what you're making.
Woowowo, slow down there. While I agree with you that its a totally bad choice for use as a primary development language, I really disagree with a lot of the generalised stereotypes of scripting languages you've just brought up there.
First: LUA is NOT interpreted, its pre-compiled compiled to byte code, then run through a VM, similar in fact to how HotSpot Java does it (though not as efficiently).
Second: Being a scripting language does not make something either inefficient or high-level. I've seen a number of scripting languages that are actually amazingly low-level and JIT compile to machine code, while unusual, they do exist. It also dosen't mean its a ineffecient, please check out some benchmarks some times, there are many scripting languages that get near pre-compiled code speed, there are even some that surpass pre-compiled code speed in specialised areas (for example a number of mathmatical languages, and in VM's that can take advantage of special instructions the CPU provides).
Third: LUA is actually extremely portable, thats one of the whole !@#$% point of a scripting language. So its not dependent on the host operating system.
Forth: Insecure? lol, no more so than programming languages. You can get back the same amount of information from reverse-enginerring machine code as you can from byte code, byte code is meant to represent machine code after all. Either way security through obscurity is retarded, if you program like that you deserve to have an insecure program.
Fith: Looks unprofessional? lolwut, er, might I point out a HUGE amount of professionally developed applications are done in the large part by what can be termed scripting languages.
Sixth:
"doesn't allow you to do certain interesting things that a lower level language could accomplish" Er, like what please? Only thing I can think of that can't be implemented in a scripting language (given I've written quite a few) are interrupt handlers, even then I doubt you would even be doing that in programming languages.
Seventh:
"and scares people away from what you're making" Er, the target audience are unlikely to even know what its being developed in, and the prospective staff audience would be incredibly elitist if they don't even look into the project before ignoring it because it uses a scripting language.
Sorry for the rant, but bringing up programming stereotypes really ticks me off.