Nah theres a fix.
http://www.adobe.com/support/techdocs/327530.html
I can relate to your problem, it really makes you go apeshit after you check and double check for the 100th time.
Why would lowering the arms make any difference at all? They'd still have to rotate them up and down for different positions (wielding weapons/shields, idle, attacking, etc.).
You would do that exactly the reason Resvrgam just said. Usually when the models are already made in the extreme...
Characters are looking much better, they actually look finished now with the new textures. Only thing that looks unfinished is the face, needs some more red in there.
Your modelers should really consider lowering the arms to a more relaxed 45 degree angle though, it will make your animators a...
It's a shame the modelers didn't model the characters in a more relaxed position (45 degrees at the arms). The arms are going to deform extremely bad at the shoulders. You can really tell from that that the modeler is still inexperienced in the animation side of cg.
If those textures are...
It's not that much of a waste. The hydra is only a small part of the mod, the mod is an entire single player campaign over 13-15 maps. If you want to read more about it its under the "About" Section of the Hydra Mod page.
http://www.romeojguy.com/hydra/
Select the mesh apply the skin modifier and weigh the vertices to each bone. If you need a tutorial on rigging Poop in my mouth has a great video tutorial. You need broadband though unless you want to wait a month to download...
on your windows taskbar go to start>all programs>Accessories>Command Prompt
open that up and type that line in there and hit enter then close it and you're done.