Hi again Geo,
I see what you mean about the default character in UE4 not having a lot of animation behind it. Sure makes things difficult for us developers dealing with creating new characters. Probably the best thing is to use “Rigify” like you suggested in blender and then merge that with the character mesh and export it via .FBX. One thing that might be helpful is you can use the .fbx converter software from autodesk that might help with that extra bone problem that blender has in it’s .fbx export routine.
As for Mixamo Fuse, you are right in that the program has some limitations but I’ve been in contact with the developers and they seem willing to keep adding features to make the tool better for us developers. Right now there web based rigging process is awesome and you get two free rigs a week with the deluxe version of the Fuse program on Steam. So that’s not too bad being able to rig two characters a week without any additional costs. And they do have custom animations available for those of us who aren’t the greatest at animation. So while it may not be for everyone I think it’s worth looking it and deciding for yourself if it’s what you need.