the tce2tcz script uses zisofs which adds about 300kb or more of size to small extensions. Using cramfs will result in only a slightly larger sized extension if they are small:
mkdir pkg
tar xzvf extension.tce -C pkg
mkfs.cramfs pkg extension.tcz
Be sure to have the cramfs-utils extension loaded to use cramfs if you decide to use that.
Tcz is almost always more ram efficient than tce since with tcz the package exists in RAM only as symlinks, aside from what may be in the user.tar.gz if one was used.
JW
I see curaga's post above while I was typing, but tcz's that are mounted on RAM still save some memory as they only take up the space of the tcz itself rather than the size of the unpacked extension.