Cool, I've never noticed that before. I Just tested it out, and it seems to do some great work!
I can't wait to see more improvements, this mod looks really promising!
Thanks for the positive feedback guys.
The other key tool together with the PolyReducer is this script to Copy and Paste between blender instances:
http://blenderartists.org/forum/showthread.php?t=49772
This script can be used to swap unit heads and other components between blender instances as well.
At a high level this is the process for Leaderheads -> Units. Save your blender files frequently and use Ctrl-Z to undo often!
(deep breath)
1. Reduce the complexity as much as possible by cutting away unnecessary elements - props, jewellery, ears, etc. This stuff can be done by texture. You are either going to merge the leaderhead with the target unit at the wrists or at the shoulders, so also lose the hands/whole arms.
2. Use the PolyReducer to get the poly count down, aiming for around 500 faces for head and torso. Check in the Texture view to see if your model still looks decent. PolyReducer effects the whole mesh by default, but you can use the vertex group weight feature to protect certain elements. Alternatively, you break the mesh up into to separate elements (using P for separate) - that way you can be much more aggressive on simpler elements like the torso, and less so on fiddly elements like the nose. Make sure everything is joined into a single object and still looks OK by checking the Texture view. Finally, remove the skeleton leaving only the mesh and delete every single vertex group.
3. Open a second instance of Blender. Import your target unit nif. Use the Copy/Paste script to Copy the reduced Leaderhead to buffer and then Paste out of buffer into the unit model.
4. Move, scale, tweak the leaderhead object until matched the proportion and position of the unit's head and torso. Delete the head and torso from the unit mesh.
5. Join the leaderhead and unit into one object. Weld together the shoulders and waist using (M)erge vertex and create (F)ace. Tidy up and tweak as necessary.
6. Assign vertices to appropriate vertex groups. I use Ctrl-Left drag to do lasso select and Ctril-Shift-Left drag lasso deselect. If you did the shoulder join option you'll probably only need to worry about Head, Spine, Spine1, Pelvis.
7. Export your nif. If it complains about unweighted vertices then you missed assigning a vertex to a bone vertex group.
8. In NifSkope delete the node of the units body and replace with your exported leaderhead/unit mutant.
It takes some patience, trial and error and tweaking to get this to work. I'm working on the Iroquois at the moment and haven't quite got the balance between poly count and quality yet. Either looks great but complex, or right complexity and dodgy looks. When I get this working smoothly - then I'll probably use a similar process for the Cherokee and Apache.