Only smooth edges that make an angle over 90 degrees. For example in your last screenshot, those square pillars shouldn't be smoothed, but the corner below the warp pipe and the one on the opposite side where there's a slight texture seam. Your lighting will look a lot better if you adhere to that simple rule of thumb.

Definitely make the buttons etc part of the texture if at all possible. It'll reduce your draw overhead considerably. The fewer polygons/vertices you can get away with to achieve the same result, the better.

It's not the debug ROM itself that's causing the problem, the unaltered debug ROM runs perfectly on hardware. The problems are many, but they're primarily issues of byte alignment, badly generated display lists and poorly managed file tables.

Banjo-Kazooie has a more fully featured editor, Banjo's Backpack.

The waterboxes contain the water surface itself, so you don't need to put in surfaces for water in the model. As for the waterfall, you'll just need to set the texture to scroll, which again is done in the importer. Not sure about making it the same level of transparency as the water, though.

There's actually a tool being worked on that will allow you to edit the existing geometry, however it does not let you add anything, you can only move existing vertices and change their blending data. It's made by Jedi. I was fairly sure they'd posted about it here, but I couldn't find it.

http://origami64.net/showthread.php?tid=164 :3


edit: Found the link to the thread here, too:
http://www.smwcentral.net/?p=viewthread&t=79199

I'd imagine that extraneous collision data would cause some slowdown, so if the collision is more optimized, that would ideally cause smoother play.

That texture is already grayscale, but it has vertex colouring applied to it. You'd need to edit the vertex colours, which I believe Quad64 supports.