I think it's helpful to define the bare minimum requirements for LfW/LuaDist documentation, get that operational, and proceed incrementally from there.
(1) We need a manner to systematically extract documentation from a package. If there's a README.txt/md in the root folder, it's safe to say you want at least that, and github itself makes that assumption. Likewise for ldoc. Help from the package metadata may also be warranted.
(2) We need to be able to systematically convert documentation for all provided packages into (at least) HTML, all linked from a single index page. This is readily achievable with documentation provided in README.txt, markdown, and ldoc formats. HTML works too, although HTML as an input format has a tendency to over-specify on presentation, leading to inconsistencies between packages (e.g. frames as mentioned), but ugly documentation is better than no documentation though, and ugly documentation can always be improved later. Perhaps we can build on the ldoc tool to handle merging of "foreign" documentation formats into the output.
(3) We probably want documentation to be portable: re-rendering copies of the documentation at new locations while properly preserving links. For example, the canonical URL for the lpeg.P function is [1], but that link isn't guaranteed to be stable between versions, we might render that documentation on the LfW website, the user might locally install the documentation on their machine, and we may want to render to formats other than HTML as well. This is an issue if documentation for two modules have links between them since we probably want to be able to systematically rewrite those links to refer to the local documentation. Perl and Python communities have handled this well, and I understand ldoc likewise offers something like this too (@{ref}), but we need to keep in mind that many modules don't use ldoc (e.g. mine never had) and perhaps never will without strong encouragement. However, it would not be impossible to likewise support such linking with documentation provided in multiple formats (README.txt, markdown, ldoc, and HTML) if certain basic linking conventions are followed within each of these formats, conventions that LfW/LuaDist could encourage.
(4) Given a certain module name (e.g. as passed to the `require` function), I understand we want to be able to systematically infer its corresponding documentation, as Peter noted. I'd go even further to suggest we'd want to infer the location of documentation on an individual function or method in a module (e.g. perhaps rendered as an HTML anchor link), although omission of this is not a show stopper. With this basic mechanism in place, editors and IDE's can be updated to take advantage of it contextually, either statically or at runtime. Fabien had been involved in work in this area too in terms of IntelliSense and type inference like things and may have better ideas.
(5) We should have some recommendations for best practices as to what to include in the documentation and its overall content structure (e.g. sections on installation, dependencies, reference, license, examples/synopsis, etc.) Perl POD has a long history of recommending various sections to include, and some good suggestions can be taken from there. The place to start is in the core LfW modules, and where these are lacking, we may need to work with those module authors. I'd be willing to offer help in such documentation reviews.
(6) The documentation conversion should properly satisfy any licensing requirements, such as ensuring the copyright and/or license are included in the rendered documentation.
(7) Any others?
Much of the above can be done *TODAY* and doesn't rely on unrealistic assumptions like that we'll convert 100's of modules all over to ldoc (as I had once tried with POD and reST). The results may not be initially pretty, but any defects can be worked on in an incremental manner (e.g. #5). #4 and perhaps #3 may require the most imagination though and must done in a way that people don't object to as too intrusive.
In some of my recent modules (at least those that are small such as [2]), I've taken a very bare bones approach to documentation, but it's one I think is still effective and that LfW/LuaDist wouldn't object to. I've documented these modules merely with a single README.txt file in the root folder of the package, where the format is either text or markdown, and the content structure roughly follows the style inspired by Perl module documentation (and not too unlike [1] either). github recognizes it and renders it as HTML (#1 & #2) and makes it forkable (#3). Unfortunately, linking and retrieval (#3 & #4) are a bit lacking apart from a more structured formats I prefer, but if we follow some conventions, it should still be achievable. For example, I see no reason why if someone writes the code "local FS = require 'fileslurp'; FS.readfile(...)" that the text editor shouldn't be able to readily infer that that "readfile" is documented on line 24 of that README.txt, if certain documentation conventions are followed and understood. I'm not saying this documentation style is best for all modules (it probably is not) but rather that it is one style among multiple, and a simple one at that, that should work well within the context of the requirements above.