From Blue Mars Developer Guidebook
Blender 2.49 Notes
Blender units come out as cm in Blue Mars so everything is very small if you export it directly. It's possible to export it without scaling then scale it when placing the objects in the BM editors, but there are some issues with that, notably that scaling occlusion and proxy objects doesn't work well.
It's also possible to work in 100's in Blender, but some stuff gets awkward such as beveling.
One workflow is to do everything in Blender units, then set the cursor at 0,0,0, centering mode to cursor, and scale by 100 before exporting. To make this really work you also need to apply the scale and rotation to the objects, which means they all have to be single user. This is necessary for the occlusion and proxy objects in any case. To do this, select all (A key), make everything single user (U 2), then apply (CTRL A).
This pretty much makes it poor for further editing, so it's best to save it as a separate blend file from the main one. Then export it to DAE, and since the exporter tends to crash Blender quite often, you'll be glad you have a saved version ready to export again.
Everything brought into BM has a pivot point at Blender coord 0,0,0 so if you have several blender objects being exported to one DAE file, make sure everything is positioned sensibly relative to the Blender origin.
It doesn't work in Blender. However, it is still very useful to have linked objects for editing, but they will be separate meshes when exported. Note that you can still use multiple copies of the same object in the Block and City Editors to minimize memory usage. See the Block Editor Comments page.
Everything exported to BM must have a UV mapped material assigned to an image except for occlusion and physics proxys (whose material name just has to end in proxy). It can be convenient to set up your defaults so the starting cube is already UV mapped and assigned to some material which has an image texture. What the texture is is pretty immaterial since you'll generally wind up working the material over in the Materials Editor anyway.
It is very well worth giving your materials meaningful names. The BM importer doesn't like names ending in .001 etc. so be careful about how Blender names these, particularly when attaching objects from another file.
These can be very useful, but create a lot of extra faces and if you want them to be smooth it may not work well. It's often necessary to go over the faces created by the booleans and clean them up, deleting extra face and creating simpler sets of faces. Being able to easily move around and inspect objects from several angles in BM is quite unforgiving.
See the Body Editor with Blender page.