Is this a legit path? You don’t have a parameter for datadir in your conf so assuming it’s /var/lib/mysql, going up 3 directories and into tmp should work, provided you have that. When you burn to disk, what’s the path going to be? You should explicitly set a datadir so that your temp path is correct when mounted on another machine.
You are telling MySQL to be case-sensitive, but you’re using a case-insensitive file system. As it says, that is unsupported. MySQL can only operate in case-insensitive mode in your setup. This is probably related to the -o ro mount option.