I'm with Todd on the Morguline Axe. I also think the Idol of Sorrow (KF:TAC) would be a cool model to have. It could be used in SoM as a statue, accessory, or 'quest' item.
I've only used Milkshape for converting model formats, because it supports just about everything, and making simple animated models. I use Metasequoia for all non-animated SoM modeling. No other modeler I've found beats it's user friendly interface. Modelers like Autodesk have a lot more features, but most of those features are useless in SoM.