Since I've tried and failed about 5 times now to get into Blender and learn it, I decided if I wanted to make models I should use a physical medium then use photogrammetry to digitize it. I was going to use Meshroom to scan it into a 3D model, then rig and animate in Blender. Maybe you should give that a try, jman0war?
I had mentioned quite some time ago about the possibility of dynamically generating the LOD groups on startup based on mod settings. For performance reasons, we would want lower poly/resolution 3D models for characters to be used at a distance, but by building the LOD groups based on a user's preference, we could structure it so that the lowest polycount model is used as the highest quality, and transitions into a billboard sprite at a distance and no mid or high poly models are ever loaded into memory.Daggerfall is a low poly world and I image low poly 3d characters and enemies could work nicely.
I really think we can make this suit darn near everyone's taste, and I intend to pursue this once the models are ready for integration.