Why cant you use decals? If you would use a LOD stage as collision box all collision information have to be interpreted by you in the scope of the collision mesh which can be way different than the original one.

Using a lowpoly mesh as collision mesh is a good idea and I am also voting for using a LOD stage if available. In connection with the MED LOD-Tool this could be a really powerful, new feature.

For now I guess you have to pay that entity overhead for LOD'ed collision detection if you would use the dummy approach. I think, the payoff will be suprisingly good compared to no dummy models and the full mesh as collision mesh