I don't know that much about it, since I'm not really the modelling person, but it should. It probably should, although as I said I don't know.

And sorry, my links have a tendency to do that... I think its because in my hurry I keep deleting the HTTP part. Anyway, this should work:

Blender

And before I forget, you don't have to use MED to get your models into 3dgs. You can get the MDL exporter for blender, which probably is better.

MDL exporter for blender