Can you modify these characters you purchase or get for free?
I use a program called MakeHuman, which can give all kinds of different character features. There is a small collection of clothes for them, so in this area, it's lacking. You would need to be able to model clothing, or at least re-texture them. You need to use a proxy model for lower poly. It's in the program.
When it comes to modeling, most people will not be able to do all the models for a medium to large size game by themselves. So you'll need to find some alternatives of some type or get a team. That's one advantage to doing hand drawings if you are an artistic sort. But there are a lot of free models around. If you read the agreements for 3d warehouse, they have to let anyone use images of their models. So you can use a program like WM with those models without needing permission. Many of them import well into Blender if the components are exploded first in Sketchup.
I'm not a big fan of realistic models, but it's one way to tell a story. The story I'm working on right now just works better with realistic models, I think.
I'm familiar with Sketchup and Blender so it works for me. Sketchup can be learned fairly rapidly, but Blender takes quite a while. There are all kinds of little quirks you have to figure out to do it, so it takes time and experience. I spent quite a while on the Blender script for WM and had to use a back version 2.49 for the floor system and another version, 2.57 for the modeling and directx exporter, which is still older than the current version which doesn't work for anything. Importing and exporting models generally turns into a nightmare. It all depends on your level of experience if it's the right choice or not.