yes, you can merge two models together. but you will have to redo the skins and i've noticed that (in my models) that you will have to redo the animation. i'm not sure why. i do know you can animate several different models in the same space. if one of the models is static, i mean it doesn't have any animation to begin with,like a sword or a gun, it's easier to work with. then, you can frame your animation for the new model around the first model.
BTW, you will problem have issues lining up the finished model to the level geometry since you can have both models lined up on the same exact spot on all the axis at the same time.
do i make sense?