Blender is probably the best thing to use that is free and open source. There's also good support for exporting to Ogre I think. I use 3ds max because I know it, but of course, that is neither free nor open source. I think the LexiExporter is the one that works best in 3ds max to get models into Ogre, though I'd have to check on that since I've used so many.
For textures and such, I'll use Paint Shop Pro. The music from the MV3D video was done in Cakewalk Sonar, and the video was edited in Sony Vegas.
Not related to assets, but the best Python editor on Windows I've found is SciTE. On Linux, it' kDevelop.