If you take Xorg-7.4.tce and edit out all the drivers (and Xvesa, Xfbdev?) you don't need, you can significantly reduce the size of the extension.
In doing the above I reduced the size to 10.5MB for the tce and 12MB for the tcz. These sizes include the large intel drm drivers, if you don't use drm, you could probably drop another 1-2MB
BTW, the "Can't open /var/log/Xorg.o.log" is possibly because "set uid" became unset in the tcz conversion - does "ls -l /usr/local/bin/Xorg" show an "s" in there somewhere?