I see in Cycles, there's the option to use the cage during a bake.
Can you also use it in Blender Internal Render?
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No, there is no option to use a custom cage for baking with the Blender internal engine. The closest you can get is the "distance" setting, which will sort of simulate a cage.
From the Manual:
Select to Active
Enable information from other objects to be baked onto the active object.
Controls how far a point on another object can be away from the point on the active object. Only needed for Selected to Active. A typical use case is to make a detailed, high poly object, and then bake it’s normals onto an object with a low polygon count. The resulting normal map can then be applied to make the low poly object look more detailed.