Yesterday I've been working for an USB-stick variant of grml. I could reduce the ISO from nearly 700 MB down to 307 MB:
% ls -lah grml_0.4b.iso
-rw-r--r-- 1 root root 307M 2005-05-16 12:40 grml_0.4b.iso
All the documentation, LaTeX and stuff like emacs had to leave. Booting still works as intented to, even X is running. ;-) Now I've to reduce the iso for another 51 MB so we can provide a grml-ISO for a 256 MB stick.