In the last commits (not offcialy released by ced), he added .z compression. These images can be created using a tool called pocket iso. Ced managed to get it working but it have some problems with multi-disc images and other things. I fixed some stuff and now i have a working build with compressed (.z images) support. Only games with cdda will not work, so you have to keep the games with cdda( tomb raider 1, 2 for example) unconpressed. All other games i tested with xa audio works very well.
Vagrant story, have about 700mb, and using pocket iso, the image go down to about170mb in size, so it worth if space is a problem.
@Dreamboy, if would like to add the compressed images support in a possible next release, just let me known cheers.
and sorry, bad english.