3DCanvas has a tool called
REDUCE OBJECT FACES AND POINTS which does just what you need. Just load it into 3DCanvas, reduce the polys using this tool and export it, then load it into milkshape.
As far as what modeling program to use, I only own 3DCanvas and that is the only program I use to model and it has not failed me yet, so I would recommend 3DCanvas, but, I haven't used other programs so I cannot compare it to others. Perhaps you should just stick to whats easier for you.
"What I have shown you is reality. What you remember, that is the illusion."