Random: No, permanently deleting or creating ragdolls is certainly not such a good idea. Better create your ragdolls and character controller already at game start, and switch player model control between them dependent on the situation. At least that's what the grown-up game programmers are supposed to do in commercial games.

3run: In all our levels collision works fine with character controllers. It's very simple, so I'm not sure why you have problems. Look here for a short script that demonstrates all 4 movement modes:

http://manual.3dgamestudio.net/pXent_move.htm

It uses a new function, pXent_move, which you don't have, but in version 8.20 you can just call pXent_moveglobal instead. pXent_move will replace pXent_moveglobal/local in next week's new public beta.

Movement with gravity is covered in the walking script example in the manual. For detecting the ground per USE_BOX, better use a flat disk collision shape rather than an ellipsoid.