Modifying /app/code/core/Mage/Core/Model/Layout/Update.php for reduction in total size of cache generated. ~250-300mb reduced to ~25-30mb. Tested on Magento 1.4.2.

gistfile1.txt

/**
     * Get cache id
     *
     * @return string
     */
    public function getCacheId()
    {
        if (!$this->_cacheId) {
            // -- CORE CHANGE
            // -- remove store scoping to optimize cache usage
//            $this->_cacheId = 'LAYOUT_'.Mage::app()->getStore()->getId().md5(join('__', $this->getHandles()));
            $handles = $this->getHandles();
            //remove store scope handle to reduce uniqueness of cached layouts --rtice
            $handles = array_diff($handles, array('STORE_'.Mage::app()->getStore()->getCode()));
            $this->_cacheId = 'LAYOUT_'.md5(join('__', $handles));
            // -- END CORE CHANGE    
        }
        return $this->_cacheId;
    }