Modifiers will not be automatically applied, and I wouldn't recommend applying a subsurf modifier before an export. That's a hell of a lot of faces you're generating.
Live KI: 34914 MOULa KI: 23247 Gehn KI: 11588 Available Ages: TunnelDemo3, BoxAge, Odema
Not with the official PyPRP, but it can be modified to use them. If you want to test my hack, see this post. I've mainly used it with EdgeSplit (my primary concern), Subsurf on a simple untextured object seems to work too, but I haven't tried anything else.