There are several alternatives that may help your collision problem.
A) Like you suggested, put Pathing Blockers. Your problem is that you quickly run out of space. One thing you could do is to create custom pathing blockers. Simply Copy & Paste one of the Pathing Blockers in your object editor, and change the Custom Path to something larger. For example, on big projects, I usually create 2 more pathing blockers with "PathTextures\8x8Default.tga" and "PathTextures\12x12Default.tga". These are pretty big, and in many cases, only the perimeter needs blocked. This would save plenty of object space.
B) Depending on the model you use, you may have a lot of room to build "inside" of it, without making the changes visible. If this is the case, select your object, press and hold "Control", then press "Page Up + Page Down". This will make the object "immune" to terrain changes, allowing you to fully edit the world around the object without changing its height / rotation. (To remove this "immunity", simply move the object slightly, then put it back.) You could build Blizzard cliffs inside the doodad, as long as they aren't visible, since they are, by default, ground collision.
C) Compare your object's size with other doodads. When you find another object with similar collision to what you want your's to be, find the object in the editor, and copy + paste the collision path. If it's not a perfect fit, you can use some smaller pathing blockers to fill in the gaps.
Good luck!
