I'd like a 100% lower engraved. Engraver is in same state as I am. Does either person need an FFL?

Is the engraver someone you can walk in with your lower and have them do the work and walk out with the finished product?  Engraving on a lower can be a complicated issue, but if you can have the engraving done while you wait, I think that there aren't any major obstacles.

They're in state but live 5 hours away. I guess tgat means FFL.

To answer your question YES it's legal to ship in state to another person without an FFL, but USPS doesn't let individuals ship guns, and UPS/Fedex require them be shipped overnight.

Any links to back that up?

From https://www.atf.gov/content/firearms-frequently-asked-questions-unlicensed-persons

Q: May a nonlicensee ship a firearm through the U.S. Postal Service?
A nonlicensee may not transfer a firearm to a non-licensed resident of another State. A nonlicensee may mail a shotgun or rifle to a resident of his or her own State or to a licensee in any State. The Postal Service recommends that long guns be sent by registered mail and that no marking of any kind which would indicate the nature of the contents be placed on the outside of any parcel containing firearms. Handguns are not mailable. A common or contract carrier must be used to ship a handgun.
[18 U.S.C. 1715, 922(a)(3), 922(a)(5) and 922 (a)(2)(A)]

Q: May a nonlicensee ship a firearm by common or contract carrier?
A nonlicensee may ship a firearm by a common or contract carrier to a resident of his or her own State or to a licensee in any State. A common or contract carrier must be used to ship a handgun. In addition, Federal law requires that the carrier be notified that the shipment contains a firearm and prohibits common or contract carriers from requiring or causing any label to be placed on any package indicating that it contains a firearm.
[18 U.S.C. 922(a)(2)(A), 922(a) (3), 922(a)(5) and 922(e), 27 CFR 478.31 and 478.30]

USPS does allow individuals to ship long guns. You must notify them it contains a firearm (though it must not be marked on the box) and document that it is unloaded and legal. Some post offices do not know that a long gun can be shipped but usually a phone call clears that up for them.