Hey Cheif and Paul,
Something I noticed and was having problems with was using DeepClone.
It seems DeepClone was just making a copy and the entities in the new BlockTableRecord and are pointing to same objects as the original,
so updating the entities the new BlockTableRecord or original will change both.
It looks like DeepCloneObjects is the correct way for cloning the entities.
Little more info in Link
While dealing with ExplodeToOwnerSpace on a newer thread today, I did see in the ObjectARX help files that ExplodeToOwnerSpace does require the block to be uniformly scaled.