Remember when Bzip first came out and out-compressed Gzip\? Well, then came LZMA with another significant increase in compression ration a bit later. And then one of the authors of Samba, Andrew Tridgell, developed a new compression algorithm called Rzip. It compresses even more efficient, though it needs large amounts (may be 1 GB) of memory to do so. And now Con Kolivas, author of the great Desktop Latency patches including the BFS scheduler and the man who designed the current kernel scheduler (though another implementation of his design was used), took it to himself to further develop the rzip algorithm. And the results are quite promising: The linux kernel is compressed about 3 times as fast as with LZMA2 with just 2 percent difference in final size. I look forward to this going downstream into end-user desktop software.
Update: Con just commented with a link to more detailed and accurate lrzip statistics.