There is nothing wrong with what I have mentioned above!
BUT there is a command inside Android Scala Installer which requests the "/system" folder to be mounted as writable. Unfortunately this does not work on my gingerbread android phone and this might be the general case.
I simply commented out the operation of the mount /system as writable (and also the command mount /system as read only) and the libraries installed successfully!
Note that I set manually the permissions of /system as writable before installing libraries
In fact I forked the github repository and therefore you can find me implementation over here: https://github.com/pligor/scala-android-libs
To summarize. Yes the only alterations needed in your scala android source code is to set the settings in Build.scala file for proguard to be false and you include the uses <uses-library android:name="scala_...
inside Android Manifest.