Smaller files: Yes you'll probably still have to have discs, may be not as many. But i doubt you'll cut down by half.
Compressing an already compressed file: Haven't tried it personally. Try a small one and see if it can become smaller yet, but extract it to see and make sure no data is lost. Sometimes super-compression can result in corrupted or lost data. So you don't want to push it too much.
Some people claim to have been able to compress 10GB into 1GB and 1GB into 10MB using KGB Archiver, but i'm not sure how true that is. Please do post to let us know how it went
PS: We're all learning, so no worries there.
