Depending on Unreal Engine Version (i’ll assume for a moment you mean UE4) you can definitely model an entire level for UE4 in a 3d app, Exporting each mesh with Collision Primitives, but read further for Optimization tips and tricks…
I would try to make large textures/skins for multiple models ad use multi/sub-objects material ID’s for multiple textured/skinned models, and also take advantage of HLOD (Hierarchical Level Of Detail) Models, where at a distance, multiple models (like rubble and a sidewalk, from 300meters) would be in one single HLOD mesh, with one texture/skin applied… Collision should be optimized, ie. use an optimizer modifier or simply weld vertices together, and at 300meters, the mesh will basically resemble the same exact thing, more-so if it’s being blocked (occluded) by another object. if you cannot use HLODs i would use a basic LOD for each model, (LOD1,LOD2, please Google “Unreal” (version) “LOD” for exact prefixes, i’m in the middle of a UDK project for America’s Army: Proving Grounds, and don’t remember atm.
Also, You are right about UV mapping being taxing. Overlapping UVs in UE4 isn’t all that bad, assuming the LightMaps can do their job, i would try to keep Overlapping UVs at a bare-minimum, to none at all. But, keeping multiple mesh’s textures/skins on the same Material can help when loading them, and reduce the “texture/mesh popping” issue UE4 has been known to have.
If you Copy/paste a model for Collision, for say a chair with 2,300 triangle polygons, that method isn’t a great way to optimize, i would weld vertices/edges as i mentioned above, and make a more “basic” primitive out of the chair for Needed-Only Collision. That is, to block a player’s character pawn, and any projectiles and/or objects and/or emitters with collision.
For other versions of Unreal, like UDK and versions before that, it is also best to export each model individually, With Multiple LOD Models and use a modular format, re-building the map, but you can adjust the pivots or centers of each mesh to import at the correct spacing and scale, if that works with Modo.