Hi Dan. There are usually 2 files in the Model folder. The MDL file defines the visual model of the aircraft. Model.cfg defines the MDL in use, much like an aliased panel or sound.cfg. MDL files for 3rd party aircraft are created with one of the various aircraft design (more correctly 3D modelling) programs.

There are limited ways for editing a MDL depending on what you wish to do. This can vary from simple hex editing to recognise different named textures to decompiling for manual "SCASM editing". The latter is a highly complex procedure involving the use of specialised utilities. Please remember that all MDL files are the intellectual property of the authors. They should not be modified for posting without their permission.

Hi Dan. I don't know what you have in mind or which sim this is for.  ???
As I mentioned, SCASM editing is a highly complex process, mainly used by aircraft designers to give their aircraft crash models & animation that works in AI. It's not for the faint-hearted & there are very few who can do it with any degree of success. Read Corrado's tutes on the subject here.
http://www.isoliti4gatti.com/scasm.htm
Fortunately, the need for manual editing is made redundant by Gmax & FSDS2.

In my experience the Model.cfg colors entries have no effect on the visual model itself. These seem to be used purely on the defaults & would only affect untextured parts of the model.

Hi Dan. Please don't apologise. I think aircraft design is what you're really interested in. Unfortunately, the choices are limited for CFS1. The only practical design program would be Aircraft Factory 99 (AF99) which I understand is no longer available. If you can get hold of it somewhere it's possible to download source files for existing aircraft to experiment with before creating your own aircraft. It has no backdrop feature which makes it more difficult to use than the design programs used for the later sims. You would also need Aircraft Animator to animate your projects. Check out the links from the SimV Aircraft Design section.

The alternative might be AD2000 which I have no knowledge of. http://www.actpub.com/Techdetail.html
Both are commercial programs.