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You could consider Powerpacker or Crunchmania to compress your executable and/or data files.  A good rule of thumb is; when you zip all your data and it is less than 880kb, you can most likely fit it on a single standard disk using the tools I mentioned.  Sure, the decrunch will take a few seconds but on today's machines (accelerated or emulated), no one is likely to notice the difference.

So the final size is 2.6MB on disk, but I havent put back all the libraries yet, so lets say 3MB. I would be struggling to fit this on to a disk even with packers. So I'm going with the .LHA and .HDF route for now. Launch will be this week at some point.