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At our local Rust meetup we have someone who's gotten WASM running on a microcontroller, so maybe that's not entirely unrealisitic. :P

Wait, who was that?

This is somewhat related, although embedded here means embedding interpreted WASM into a CLI application.

Similar method might be doable on an MCU.

Then there's "WebAssembly interpreter in C":

Looks like it might be good enough for implementing WASM "scripting" support in smallish environments.

https://crates.io/crates/parity-wasm is an interpreter in Rust; there's some really interesting stuff happening with it in various forms. One of the most... extreme is https://www.reddit.com/r/rust/comments/88sxah/nebulet_can_no... (There are some more production-aimed things as well.)

I think this idea has a lot of merit, overall, exactly as you say: kind of like a Lua.