It's not broken out of the box except on Windows. So what's new?
I didn't see a smiley face, so I assume that this is an honest question...
In Windows, the question of where to put script files, dlls and command line executables is not so much a matter of debate (Microsoft provides answers to these questions) as it is foreign enough that it's not typical for packages like Lua to adopt / provide installation procedures that follow those conventions. This seems reasonable, to me.
The trouble is when *some* help is provided and when that help is in contradiction with other settings. This is what happens with the MinGW option.
As Peter Drahoš points out, because `!\` means "the path of the host executable", we can avoid the debate entirely and the user can decide where to install "lua.exe" without needing any further configuration. Specifically, they don't need to set LUA_PATH or LUA_CPATH and at most, they add `lua.exe` to their path.
So yes, it's broken (or at least misleading and messy) for MinGW, but it seems like it could be so easily cleaned up. For MSVS, the situation is fine, except that LuaRocks still wants to use the *nix sub-tree structure, but that's another issue...
