Update: Bastien Montagne (main developer of the Blender fbx exporter plugin) made an update to the FBX exporter adding some additional scaling options for the FBX exporter. The new options didn’t fix the issues, but I did found out some things so I will post what I said there here as well.
"I tested the new version. None of them gave the perfect result of normal looking mesh and normal looking animation. AllLocal and FBXCustomScale gave the result of a scaled mesh but tiny animation. The root bone has 100 scale in the skeleton but 1 scale in the animations. FBXAll and FBXUnitsScale gave the result of a tiny mesh and tiny animation. Basically what you would expect if you exported meters as centimeters, it seems like it wasn’t scaled at all.
I did find out some interesting things however.
When importing a 0.01 metric (working) scale mesh into UE4 and in the UE4 import settings selecting 10 import scale, the mesh is 10 times bigger than usual but animations still work. Checking the skeleton, the root bone is scaled 10/10/10. In the animation it’s still 10/10/10. This means that scaling the root bone but not any other bones is the UE4 way of scaling a character.
This means that when importing a character with AllLocal or FBXCustomScale the root scaling is 100/100/100, which is what you would expect in UE4 terms. However when you get the error “Imported bone transform is different from original. Please check Output log to see detail of error.” from other bones having a scale other than 1 (in these cases all bones have 100 scale at import time), all bones in the animation have their scale reset to 1,** including the root bone**.
This should mean that if the root bone scale wasn’t reset to 1 in the animation the animation would look like you would expect. This seems like a UE4 bug for now.
Since FBXAll and FBXUnitsScale gave a tiny mesh/animation I tried scaling them 100 times in the UE4 import instead. It worked without any errors, the mesh and animation looked normal. However the physics asset (ragdoll version of the skeleton) was messed up, the physics bodies had too low of a mass, and when scaling them they would turn bigger and they were stuck that way, you couldn’t make them smaller.
It seems like the physics asset is created without taking scaling into account which seems like another UE4 bug.
I will report these bugs for now. I think that if you could scale only the root bone and leave the rest of the bones at 1 scale in the FBX export things would work fine."
The bug reports are here: