Modify DTS files for collision support

#1 Short answer : Yes

Long Answer : Yes, but you will start to experience more slowdowns, since the code will have to check for collisions against more polygons.

If your planning on having, say, a large building as a DTS file, chances are your framerate will decrease as your building has more poly's which you are displaying *every* frame. Therefor, you will also have to either :
A) Split it up into smaller pieces and fit them together in the world editor
B) Modify the DTS code to have a specical mesh type that only renders polygons (or rather, primitives) that are visible on the screen (e.g via using an octree)

(Whilst there is Sorted Mesh code in the engine, it does not appear to occlude anything. So regardless, the whole model is still drawn.)

As for the lighting, DTS does not use any lightmaps. So if you are indeed making some form of large building in DTS format, you may want to add optional lightmap support to the rigid meshes. (otherwise they will most likely not recieve shadows is a believable way)

#2 Sorted Meshes are for transparent models - to make sure that stuff is rendered in the right order all the time...

In general, you're right.