USe Model format so that you can employ fustrum culling or clip culling (search for both with the Search button)where if any poly's are not seen by the camera they are culled out.
Models also do not require as many resources as block geometry as there is no extra collision checking for the engine to do as would be the case with block geometry.
Unfortunatly, model does not have the same shadowing features as blocks and you would then need to apply lightmapping to get similar results, a feature that is in its infancy in GStudio.
How ever, the lagging probs would dissapear using models.

Another method is to use clip_range with dynamic screenshots where the screen shots replace the geometry past the clipping range as a background image but I have no idea how to approach that one

There really isnt any method to optimise large area spaces as all engines have this prob due to the way rendering levels work for real time viewing.