Well, I put together a skeleton for this model, and screwed up - on the other hand, I learned quite a bit about how Blender does skeletons and got much closer to a working one.
One little irritating thing about Skeletons in Blender is how it only lets you rotate one end of each bone, and it isn't always the end you would want. I also found that if I put the first bone in the head and worked down, then if I wanted to rotate the head the program would instead rotate the whole rest of the body and keep the head stationary, the opposite of what I wanted.
I have to build another skeleton anyways, what I might do is place a "base" bone in the torso that isn't connected to anything, so that all the other bones are child bones of that base bone. I think that would make the animations much easier, if everything rotated out from the center torso area.
Of course adding such a base bone shouldn't affect the end-resulting MD2, since as far as I know the export doesn't include the bones with the MD2 anyways, just the vertexes that the bones moved, and the bones are only used within Blender for assisting in moving and positioning vertexes.