One thing I've added to the FAQ I've been working on (and of course I
welcome answers from everyone else...) is the subject of how many
frames of animation a VM can hold (Using the converted LCD file
approach).

I won't go though the whole thing, but basically my maths leads me to
believe it's roughly 300 frames using current techniques, or 500 if the
.vms application can read a separate file on the VM

[you can read the faq @ http://rvmu.port5.com/faq.html ]

Anyway, this has led me to wonder about compressing the frames on the
VM.

the obvious sollutions would be some kind of run-line compression (i.e.
instead of writing %11111111 for eight black pixels in a row, you can
encode "eight on" by some means) or possibly some form of huffman
compression (Patent problems withholding..).

However, is the VM up to the job of decompressing such data on the fly?