I'm not sure if that version of BrawlBox fixes the problems or not, but if it doesnt, then you should keep an eye on the importing mdl0 file thread at smashboards since a lot of people are having that same problem when using models from other games.  So, whatever the problem is, and whatever can fix it, I'm sure it'll be discussed there.

Also,

some random Voldo SCII moves

.

Have you given up on trying to fix the graphical glitches, then?  And if it will be your final release, why not make it a 1.0?

So, what happened to the momentum with this project?  Is it still being worked on?

I also think that this is a neat idea.  I commend you for going for something original.  Best of luck.