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Hey Jason,

This sounds like an interesting project.

Instead of implementing a VM in ActionScript, you should write a compiler that emits AVM2 bytecode, along with a runtime library in ActionScript for Lua operations that don't directly correspond to AVM2 opcodes. For more information about AVM2, including an ECMAScript compiler implemented in ActionScript, see the Mozilla Tamarin project.

As for an open-source license, I would consider these three:

1.  MIT/X license:  Same as Lua 5.

2. Mozilla Public License: Use this if you want to require other developers to share modifications that they make to your code, without preventing them from using your code in proprietary software.

3. GPL: Use this if you want to require other developers to share modifications that they make to your code *and* prevent them from using your code in proprietary software (or you could use a dual licenses, GPL plus a commercial license).

I hope this helps.

Matt