I think you can do it with the unreal format..

First, get the free ActorX Plugin, then export yr model, I think it goes to one of the unreal formats, then you can open it up in Milkshape and do an export straight to mdl7

The path you describes sounds nightmarish!

Yeah I really look forward to the FBX support! Then you could use motionbuilder, that'd be xslint.