gcc-4.0, put in the -Os option, and got a size of 814K! This is with all I need in the kernel and the kexec option. If you recall my limit is about 950K-960K so this is perfect. I am assuming the kexec tools needs clib so I will have to splice this into busybox somehow but hopefully it won't add too much.
If you want to try and go further then:
http://redhat.com/~mingo/debloating-patches/
They are for 2.6.16 though so you will need to go into developent territory. Ingo claims a extra 5% or 6% size reduction. Its not clear if this is with or irrespective of the tiny patches.
-- Richard A. Smith