yes i tried.i can build game --with-embedded-lua option only if only i changed 

include directives into source files such like from "lua.h" to "../lua/lua.h".

i think your approach is incorrect that just double quoted include directive as

#include "lua.h"

i think a better approach is using relative addressing as 

#include "../lua/lua.h" 

and use gcc's -I.    (search for include in current directory ) option.

Or create and set few options like --lua-include-dir ,  --lua-library.

i think having own lua is ugly work around. 

i will try to make a lua 5.2 patch.and i will send it when/if achieve.