I'm not using LuaSocket but my own homegrown code based off epoll() (it was a learning experience in embedding Lua). It could probably be adapted to libev if I had the interest in doing so.
Ok. What you wrote would adapt to select and nonblocking sockets in LuaSocket pretty easily, FWIW. Using epoll / kqueue (directly or via libev/libevent) scales better, but you're blocking on the sleep, so it wouldn't matter.