Lod0 as source quality mesh Lod1 as game mesh?

Hi!

I would use source quality mesh at close quarters (I mean really close quarters situations like smelling a flower), but if the player is seeing the scene he/she would always see the lod1 which is lowered quality mesh. So my question is will be a performance hit if I would use the lod system as I mentioned above? How the engine handles this situations, it loads the full quality lod, and eat more memory or just loads the lowered quality mesh?

Thanks!