Hi Omer,
This question has come up a couple times recently. “Out of the box” this plugin will not load properly if included in a theme directory instead of as a plugin, as the paths to the assets looks in the plugins folder.
You could modify those paths when placing the plugin in your theme folder to make it work, and I may make changes to this in a future release. However the use case you describe is not one that I really want to see people using.
By having this plugin in the theme, it will be excluded from the normal plugin update process. Plugin updates are an important part of WordPress, both for functionality and security reasons. For instance there was a patch to this plugin (v2.1.0) that prevented icons breaking for the (then upcoming) FontAwesome 5.x release.
I understand it is still important at times to ship plugins with a theme, and there is a good solution I’ve used in the past: TGM Plugin Activation.
Let me know what your thoughts are.
Matt Keys