Trouble is that the lightsaber on it's own should be a unique and deadly weapon, but they keep trying to out-do the previous stuff when you don't have too. We're soon going to get to the point these become ridiculous and in some ways we've already seen that with the inquisitor sabers and Kylo's goofy saber.
I don't use photoshop but try opening it in MS paint and saving a copy, I know from using gimp if I have my export settings to progressive with jpg I'll get errors.
As long as you leave model_root 0 in tact you'll be fine, but LOD's are there to improve performance. They are set-up to reduce the quality of the model as the player gets further from said model. If you have no LOD's then the model is displayed in high quality at all times.