awesome. i was going to ask if you had any luck. thank you!

2.71 implemented a way to mark sharp edges without using the edge split modifier. Supposedly it allows for sharp corners without actually splitting the edges, thus saving extra vertices, which is good for games. I'm not knowledgable enough to describe it better but here http://wiki.blender.org/index.php/Dev:Ref/Release_Notes/2.71/Modeling is the change note labeled "split normals" near the bottom, and here is http://www.youtube.com/watch?v=R6tUNM9AK0M a video showing it, at 8:08.

I have a model file from 2.66, which worked fine (screenshot http://cloud-4.steampowered.com/ugc/30715603660324214/A9BDC9D21B46895B2BFA4C0532B2CDFC5AE9D84D/ ), opened it in 2.71 and redone using the new edge sharp method. Seen from the viewport, the edges are indeed sharp where they should be, and smooth where they should be, but upon exporting and opening it in game, everything appears to be smoothed (screenshot http://gtm.steamproxy.vip/sharedfiles/filedetails/?id=293242517 )

The good news is, edge split modifier still exists, so the old way can still be used.

I'm not well versed in the technical aspects of these things, do verts gets merged anyway when Blender Source Tools export the item? If so then we can just keep using the old method with no drawbacks in extra verts, right? Regardless, it would be cool if we didn't need to.