Lua is good enough.
The majority of games on the current staff picks are Lua (Oom, Balanced Brew, Pullfrog, Shiift, Root Bear, Loona Landa, Core Fault, Under The Castle, Space Master, MDMA).
A few are C (Detective Face, but for personal preference not performance reasons) or a mix of C and Lua (Mars After Midnight, P-Racing).
And a couple are Pulp (Eyeland, Nightingale).
(There are some I'm not sure of, and apologies if any of the above are wrong.)
The staff selection varies over time. My game YOYOZO was on the previous list, pure Lua, only 39KB, and got a GOTY accolade from Ars Technica. Daily Driver is all Lua and runs at 60Hz which is higher than the SDK allows out-of-the-box, for which I received a Community Award 2022 for Technical Achievement using SDK. And the game I'm currently working on, KOATARI, is Lua and runs at 100Hz.
I would say worrying about performance limits before you've hit them feels like premature optimisation. Make the game the way you're most comfortable and worry about limits when they're real.
Pop on over to the Playdate Squad Discord Server to discuss specific details.