Hm, it seems there's a GE bug when trying to use vertex blending (skinning) and lines. If I draw an indexed array of lines (plain lines, not strips), the second vertex always gets transformed to 0,0,0, so you end up with a fan of lines from the first vertex to the origin.
It also seems to be very slow; it effectively triples the time spent waiting for the GE to finish drawing, from 3ms to 11ms for ~2500 vertices. When I disable vertex blending by not having any weights in my vertices, the extra lines add no measurable time.
The other matrices are applied as expected, so it ends up being fans to the model's origin. Line strips work as expected.
This is with 1.50...
Just an interesting note.
Hm, but something else strange seems to be going on in there...