An iso (international standards organisation) define`s the layout of the disc in question, That include`s all the empty areas of the disc which are compressed in the rar/zip file. So when the empty parts are compressed they take up no space at all in the rar/zip file. So that leave just the use parts of the disc, Which is the 17mb of the compressed file. The disc was not full, So 700mb > 17mb does go.
It's impressive but doesn't matter in this conversation; where're you going to put it after/while you unpack it? The GP32 only has 8MB of RAM, and "streaming decompression" on this kind of hardcore compression algo seems like a performance killer.
Now, if we could work up some kind of hard drive interface for the GP32.... *drool*
http://www.sega-saturn.com/saturn/other/tech.htm
read that, a total of 8 microprocessors of which 3 are powerful 32bit risc-processors
how do you want to emulate that with even 300mhz?
sure, you can leave the sound- and maybe the cd-chip out, but how do you want to emulate the 2 main-cpus and the 2 gfx-cpus?
would be a phat bitch, so no, it's not possible
psx could be slightly possible with usb-stick or hdd, or cd-support on gp32..