In theory yes. But no.

Kobold2D does not provide a Lua scripting interface for game engine classes, eg you can't script game logic in Lua. What you can do is to edit your game's parameters in Lua, then read them in with just one line of code.

Kobold2D relies on Wax which uses the Objective-C runtime to create dynamic bindings to Lua. So you can write Objective-C code in Lua. However, there's really little benefit to that. You lose the ability to debug your code and you'll have to handle awkward syntax that's almost like Objective-C but not quite. The only benefit is automatic memory management, something that Automatic Reference Counting (ARC) will address with iOS 5 anyway.

The Wax binding code through Objective-C runtime features also adds a significant overhead so that scripting games with Wax will give you bad or terrible performance. To get a good performance you would have to write C functions manipulating the Lua stack directly for each function that you need in your scripting language. This is currently not available in Kobold2D.

I suggest to check out the Corona SDK if you want to write your entire game using Lua with good performance and also be able to deploy to Android devices.