Thank you marcus_civis for the reply. I gave it a try with no luck. I see what you were trying to do though. By cloning the top sub tool you ensure the scale is correct, and then by importing at the lowest subD level is another way to ensure that, since it is using the original tools scale.
I am not sure why, but it is still extremely large. I used the deformation tools and scaled it down and offset it by hand, but if this needed precision, it would not be possible to fudge it in place.
Another thing I noticed is that when I clone, it does not select the clone, it renames the current tool and the past tool (the one you were on when you pressed clone) is the one that loses its subtools. I tried both ways but I found it was best to switch to the clone and then delete and import so I could switch to my ztool with subtools and append without having to re-load tools.
Thanks again for the reply, I will post back if I find any solutions.