If I create something in Milkshape with animation, textures, etc....is it accurately ported over to MD2 format if I choose to export it as such?

MS3D support skeletal animations and MD2 files contain morph target animations. It is easy to convert skeletal animations to morph target animations. But it is not easy to convert them back (maybe it''s even impossible).

So you will loose the skeletal information like bones and bone keyframes.

- Mete