There is sorta kinda the Blender option... Blender is a free open source modeling program.
Back in 2010 someone posted a detailed thread or two talking about how to export models from Blender via Havok to the hkb format. Unfortunately, there wasn't a way at the time for Blender to view hkb files directly, or any way to import them into Blender (to modify them).
I just checked the Blender site, and didn't find anything new about .hkb support. So you may have to go another route if you want to work with any of the existing files, as far as I can tell.
Icons, Medallions, etc. of course are in a much more usable format, and .dds files can be manipulated in Photoshop with the right plugin, so Textures are still within in our reach at least.
So, if you can think of a clever way to make that Crossbow look like a rifle using textures...