as for the obliques,
It's not completely the fact of working them out that makes the 'lump'.
Like i said genetics come into play, as there are tons of people who work out their obliques and still don't have the lump and others who do.
Also proportions. If you have broad shoulders and a well filled out chest along with some good lat muscles, it will not give the 'pudgey' look (although i think it makes people look more muscular than pudgey). It will make it seem more like the torso gets thinner and thinner the lower you go.
If you want an example, then look at ryan reynolds. I was just watchn amityville horror a week or so ago, and he has what your talking about with the 'lump' at the lower obliques, and he's like 4% bf or something.