I have patched Blender to include an adjustible collision margin per object. This allows users to ethier remove the collision margin altogether or create rounded objects w/o expensive collision geometry. Now capsules and chamfer cylinders are a breeze.
Get a MAC OS X PPC build on graphicall, windows coming soon.
Cool!
Thank you for this 
Did you download it from graphicall?
heres a sample .blend of what can be done:
http://uploader.polorix.net//files/551/margin%20demo.blend
Dont have a mac so I can’t test this yet but would these collision margins be animatable in realtime?
Also how does this differ to disabling collision on an object faces and parenting it to a lower poly object with collisions enabled?
Sounds interesting though. Ill look when there is a windows build available.
I believe that collision margin refers to the margin of error in the collisions- if you drop a box on a plane in bullet, you can see that it doesn’t quite touch the plane. I can’t test the build either, (damn you, windows!) but I assume this fixes that… right?