O2lite does seem to be a good program (I'm new to it, the jury is still out).
However, it would be nice to be able to convert 3d models from Milkshape (and all other 3d programs, particularly 3DMax 3ds files) to allow the OFP community to take advantage of pre-built models that are all over the web.
You'd still have to add the LOD stuff, but it would save a ton of time and push mod development forward at a much faster rate.
Deke