Blender and Subsurfaces

#1 In Blender you need to convert your subsurfed mesh into a mesh again (select the mesh, subsurf it and hit Alt+C in object mode and choose delete original). I tried this just now and the result is a high poly mesh with subsurf turned off (and a very slow Blender, but hey it works).

#2 So the model will be high poly in torque right?

#3 Yes. When you convert a subsurf to a mesh, the result is a high poly mesh (in my case the original was a little over 3200 faces and the converted mesh was nearly 12000). I never tried exporting it yet, but I'm quite sure it'll be high poly, as it is a seperate mesh from the original.

Edit:
Interesting enough, even though this conversion is actually creating a new mesh from the original, it still keeps the parenting to the armature as the original mesh did. However upon further inspection, the vertices do not get added to the vertex groups. So you'll need to re-assign your vertices to the groups or re-parent the mesh to the armature (for automatic assignment, from closest bones) if your mesh uses an armature.

#4 I had the same armature problem with Blender version 2.42a.