Tiny Core could be smaller by using lzma compression, but then it is not just about delivery size. Performance weighed heavily on our decision to stay with gzip. The difference in boot times were very much impacted when lzma was used. Again, I am happy with the decisions that were made for Tiny Core. A balance of size and performance that servers a wide spectrum of uses.
Tiny Core is so small already, making it smaller doesn't seem worth it at the expense of a speed hit. However, for my particular application it might make sense to create the "payload" binaries as a LZMA image, to save on RAM. (The image would be copied to memory before mounting so this is a case where compactness would be more important than speed. The binaries would be used in a non-interactive capacity, so a slight speed hit would never be felt by the user.) How much sense LZMA would make depends on how big the payload ends up being. Depending on plug-ins, etc, it could end up being pretty large.
Does the current kernel still support LZMA?
My concept for customizing Tiny Core is to package the scripts/tools required to BUILD the images needed as a TCZ. The tools would help the user make a bootable USB stick with their renderer bundled in a TCZ (since I can't re-distribute the commercial renderer) It would also include wrappers or a basic gui to configure the lave nodes as required. (though if everythign works correctly that could be automatic) This would be for Lightwave Core, the next generation version of Lightwave 3D (Core is really the name!). Lightwave historically provides free (as in beer) network rendering and this new version will have a Linux native port. Anyway, I don't know exactly what LW Core will require from a distro just yet (it still hasn't shipped) ... but I figure I can at least start familiarizing myself with Tiny Core now so I'm ready to tweak it and hit the ground running once LW ships.