Blender is probably the best approach for models
http://www.blender.org/You'll have to export your model to either, MD3/MD5/OBJ/IQM (not sure of other formats) requiring a plugin;
MD5/MD3, the former typically used for animated mapmodels, the latter for static models
http://www.katsbits.com/tools/ (might need an older version of blender)
IQM typically used for the playermodels
http://sauerbraten.org/iqm/#For vanity items you want to add a single "bone" to your model that is used as the anchor point.
Weapons are quite simple to make/export, but animating them for the hwep/reloading is another story.