No crash, NVidia 7900 GT, 64-bit Fedora 7, driver 100.14.19.

But...
In many (or most) cases removing those three lines does not change anything, because gldrivers.xml disables all three settings anyway (all ATI cards ? NVidia on win32 ?). So, it would be better to change "false" to "true"... (unless the only intention is to find more cards which require disabling texture_rectangle extensions).

Option "twosided" in b2cs menu works exactly like this: during export it automagically duplicates faces and flips normals while retaining uv map. However, it causes (or was causing) problems with lighting in CS, opposite faces cast shadows on each other, although they should not do it. So - better and more predictable effects can be achieved by duplicating faces manually and pushing them away from each other a little bit.

I'm not sure, what is Your problem with transparency. Options in b2cs gui don't affect the way a model is displayed in Blender. For this to work you need to go to "uv face select" mode and push button "alpha" on "texture face" tab, do it for each face wich has texture with transparency information.
Still, in Blender's 3D workspace transparency glitches always appear (at least for me). Renders should look OK though. Also try to play with button "ZTransp" in material settings.

Setting priority and zmode for items will not help at all, because those settings in CS affect objects, and you are supposed to produce factories (libraries), which then will be used to create objects placed in the world by game engine, and this is the game engine, which will decide what will be priority, mixmode, zmode etc... However, by preparing material in proper way you can get good results - find in b2cs gui (material menu, section: texture) option "binary" and set it to true (I think it was called texture_binary in older versions of b2cs). This usually gives best results with transparency in CS (although it does not help with translucent textures).

BTW: question for Karyuu: will those object be of type sprite3d or genmesh ? Or maybe something else is planned ?

One more comment about transparency in CS - it often works unreliable and unpredictably and it is hard (or even impossible) to make an separate object which would always look good in CS . So don't worry too much, I hope that the new CS renderer will deal better with that.

Edit:
Note about using "twoside" option: remeber, that model after export will have 2x more triangles than shown in Blender.

First thing (if You did not do that already): replace directiories "data" and "art" with those from binary version.
Other errors indicate, that You probably haven't  installed all needed  development libraries and headers: freetype2-devel, alsa-devel and libxxf86vm-devel (I'm not sure what are the names of them in Debian), so some CS plugins were not compiled and are missing.

I don't know what the devs can do about it except to add more furnaces to the game.

*** 2006-11-29 by Keith Fulton
- Implemented the basic server support for instancing.  Every character and item in
 the game now has a 4th coordinate, usually called worldInstance, which is used in
 calculation of proxlists.  Only entities which share instances can see each other
 on proxlists, which means only those appear on one's client or in chat broadcasts,
 etc.

More was addedd since then to the code... I doubt it was added to support sharing of furnaces, but I think it can be used for that purpose.

Hmmm... For switching viewports in KDE I use Ctrl-F1, Ctrl-F2 etc., I think those are default combinations (they always work for me). If those bindings  are not working for You, define them in control center, they don't collide with Blender specific hotkeys.

[root@home planeshift]# ./updater
./up: error while loading shared libraries: libstdc++.so.6: cannot handle TLS data
[root@home planeshift]#

It looks like incompatibility with components installed in Your system (kernel, glibc or other libraries).
Try to remove (or rename) file libstdc++.so.6 in <planeshift_base_dir>/libs. I doubt it will help, just try if it changes anything.

May I ask what distro you are using BTW???

You are right, this information might give best clue.

Crystal Space currently does not support Direct3D, although it has some kind of (preliminary) support for Direct Draw 8 2D rendering (last reference in history.old is dated 3-Jun-2001). It is listed on current TODO list as low priority optional feature.

     * Direct3D: Not currently supported. (If you would like to write a
       Direct3D renderer, please contact us.)

If You want Direct3D in Planeshift, write appropriate plugin for CS.

Then in Planeshift switching to DirectX/Direct3D would require only some changes in psclient.cfg, for example:

System.PlugIns.iGraphics3D = crystalspace.graphics3d.Direct3D
Video.DDraw.Canvas = crystalspace.graphics2d.ddraw

No need to mangle PS code .