If I remember the old HL1 game correctly, it had an acceptable epoly limit of around 5000, so I don't reckon 200 odd is too much for a nice little embelishment.

I mentioned smoothing groups in irc. Looking at the top pic, in particular the pieces of square rope, they come to mind again. When you create a block in milkshape, each face is assigned a different group, so that the corners stay sharp. When you assign the whole block to the one group, it rounds it off a bit. Maybe try the same with the blocks that attach to the sign, but to be honest, I think you should work more on them. They look like you just threw in a couple of cubes because you didn't know what else to do. Make them thinner, like they've been folded over the sign, and paint a srewhead onto them, maybe. Or even some water stains running down the sign from them could help them blend in better.

There a prog from nvidia that you might be interested in. It's meant to create various lod models from one high detail model. My system doesn't seem to like it, though you may have better luck with it than I did. It only supports a few filetypes, but you can do the necessary juggling in milkshape.

I'll always envy modelers