For blocks and models (not controllers), the override is pretty simple. Unless you want to make a module portable to other projects, you can copy the model you want to override from core/ to local/..
So if you want, for example, override Mage_Directory_Model_Currency, you have to copy app/code/core/Mage/Directory/Model/Currency.php to app/code/local/Directory/Model/Currency.php, and make modifications to that local file or use the following XML configuration.
<?xml version="1.0" ?>
1.0 XLPages_currencymodule_Model_Currency XLPages_currencymodule directory