http://www.youtube.com/watch?v=F0obVtzltng this is what I am doing, I hope this gives a better description.
Ok I watched the vid.
What you want to do with the LOD:
In the drop-down menu, go to 5-9 and just delete them so that you're back with 4.
Just make sure the LOD and the subobjects match up again after that. (ie. 0 is detail0, 1 is detail1, or however it was in the original.)
Repositioning firepoints and susbsyetms can happen later - they only affect in-gameplay statistics and their positions are basically arbitrary. It's more important just to get the model to appear.
Also make sure that when you're saving, the new model has the same name as the old one (or change it appropriately in the tables, actually - that's safer)