[Mister Micawber]

(1) The indirect form is fine, while past perfect is formally preferred by some strict grammarians, and the number of verbs in the dependent clause is irrelevant.

'The speaker was speaking and the audience was cheering.'
He said that the speaker had been speaking and the audience had been cheering.
He said that the speaker was speaking and the audience was cheering.

As long as there is no confusion about the time relationships, simple past is adequate and past perfect is overkill.

(2) Also wrong rule. Nothing to do with length of time.

"I lived in London for 2 years."
He said that he lived in London for 2 years.
He said that he had lived in London for 2 years.

Again, both reported speeches are fine, with the same caveat: as long as there is no confusion about the time relationships, simple past is adequate and past perfect is overkill.