You’ll need a build of blender with the mesh deform modifier for this to work. Basically wanted to have a play and see how it all worked using a low res cage mesh to properly deform a higher res one. It’s a real simple .blend file, but the outer cage has one shape key to fix the elbow deform, and then you are free to put muscle bulges (and more importantly things like detailed facial expression shapes, not included here though) on a higher res mesh. I have one really bad muscle shape in place to show what I mean. Shape keys still driven by ipo drivers.
I’ll post more detailed tests as I do them.
http://uploader.polorix.net//files/12/MuscleArm.blend - 160kb or so.