> Methods or programs to 'simplify' the resulting point cloud so that it 
> still is a fair representation of the overall area, but has much fewer 
> points ~300k.
>
> Methods or programs to create a single mesh of the resulting point cloud 
> that can represent tunnels.

This might be useful:

http://en.wikipedia.org/wiki/Delaunay_triangulation

How accurate are your points?  If there is some noise in them you might want 
to work on that before creating the mesh (eg using some nearest neighbour 
averaging scheme).  If they are all pretty accurate then just generate the 
mesh first from the points, then simplify the mesh afterwards.

For simplifying the mesh there are probably some known algorithms, but you 
could start by just merging smallest triangles with similar normals etc, 
maybe even some 3D modellers like Blender have some functions for 
simplifying meshes?

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