You get reputation gain whether you apply the mod or not. Every engineer has blueprints that vary from fairly trivial to fairly hard at each grade. Gain reputation by doing the fairly trivial then use the harder to get materials on the mod(s) you actually want.
In general I view Tier 1, 3 and 5 as the interesting levels. 1 because, well you have to start somewhere. T3 because it's usually pretty easy to get T1 and T2 by burning 6 blueprints worth of junk materials and then get the T3 blueprint. T3 is where the pros/cons of mods start to come through as well. T5 because, well you have to stop somewhere.
By and large when I unlocked an engineer I usually immediately jumped to T3, then moved onto another engineer. Then went back and jumped the useful ones to T5.