"subobjects still get a seperate render call and so the more you add the slower it's going to get."
words of wisdom

but still if there is some pipe greebleing aroung an (200 meter) engine on the back of a 5000 meter ship, there is no reason to waist time drawing the two pixels that 500 poly's worth of pipe greeble is going to equate to.
@KARMA:
1)no, they need to be siblings (children of the same parent), child objects will only be drawen when there parents are so if you make a low detail version a child of a high detail one, it will never draw (because the only instance when it even will be evailuated will be when the high detail object is drawen, wich is when the low detail one never should be).
useing an engine again you have an object with 1500 pollies and a 500 poly version, the size of the object is about 200 meters, so 2000 meters seems like a good sized distance. makeing the two versions of the object childeren of the same parent (most likely the hull) you give them identical detail boxes, but the low detail version a -1 value and the high detail version a 1 value, in addition you make a bunch of pipe greebles on the engine subobject, lets say you use 1000 polys for this, but there only realy visable when you are looking at them from within 500 meters, so you atach the pipe greeble to the high poly engine as a child, then setup a detail box that is about 500 meters in all directions. now lets say after that you decide to make some super greebleing lot's of little cuplings and braces and things holding the pipes together and crossmembers and stuff, it adds another 1500 pollies but it's only visable when you are like right in front of the object, like within 100 meters, so you atach this super greeble as a child to the pipe greeble (because it'll only be visable after the pipes are) and give it a box that's just a little bit bigger than the bounding box of the object.
2)unfortunately this was built as more of an object culling system so you can't realy have like a 100 poly version of an object, then a 1000 poly version, and then a 10000 poly version, you can only have two, and if your not carefull you can end up with situations were both or neither get drawen. although in some very specific situations you can sort of cheat and get a few intermediary versions, but this requiers limiting how the player can aproach an object (basicly in a hanger)
3)don't make the entier hull out of sections, but it would probly be good if you could add detail in groups, the way this is suposed to work is the closer you get to an object the more 'stuff' shows up on it, it isn't exactly like the traditional LOD system you'r familiar with were you make poly choped versions of a high poly object, with this you simply add more objects.
4)well, the max number of *points* that can be assigned to one texture on one object is 65536, that does not equate to a hard triangle limit, but you know you will have at least 1/3rd of that (almost always a lot more than that, you could have more tris than points). don't think there is a max on subobjects, if there is it's probly 256 or 512.