Yes on the 1.5" gauge, and no to having converted a model (engine). Most engines we have looked at, it would take building a new frame to re-gauge the chassis. After considering that, it wouldn't take much more to just scratch build the entire locomotive.
We have installed new trucks under freight cars, and re-gauged existing wheel sets under some cars to run on our layout. The problem with this, most of the cars we have are not correctly detailed. So, after you add new trucks and kit bash an existing car, you might as well have scratch built it too.
Casey