-You will need:
1. TMPGEnc ( You can get the freeware version at http://www.tmpgenc.net )
2. Something ready to encode.
3. A relatively fast computer or lots of patience. (With a CD-Writer)
4. A good burning program like Nero Burning Rom to burn the VCD to a CD-R.
-Things I've done using this method that you could do too:
1. Fit any movie around 2:30hrs in single CD.
2. Fit up to 40+ AMVs on a single CD. (My friends go "WTF?!" all the time.)
3. Distribute fansubs to poor friends that can barely aford a DVD player.
-Things I haven't tested yet:
1. Playing these "non-standard" VCDs in standalone VCD only players.
2. Make "shorter" VCDs that have 2x or 3x the regular quality. (I guess it can be done, but the point is to SAVE space.)
--Getting Started--
1. Install and/or run TMPGEnc.
2. Use the wizard. For VCD make sure you match your source's framerate.
3. Choose your source. If it's proggresive don't use interlace options. (For BEST results use a very clean source like DVD video for example.)
4. Choose whatever filtering / clipping options you need and click next.
5. Now this is where it gets fun. First, click on the expert button. A window will pop up with various tabs. You will only really need to tweak 3 of them, which are video, audio, and system.
6. In video tab, set search motion precision to highest quality setting. Even with the lowest bitrates, using this setting will produce AMAZING results. Now, click on bitrate and select "unlock". This is what actually allows to modify the bitrate to get your video to "fit".
7. In Audio options, you have 2 choices. Leave it as is, or click on bitrate to unlock it. Personally, I DO NOT recommend any setting below 160kbits Joint-Stereo. (Unless your source is mono?)
8. In the system tab, unlock stream type and select "MPEG-1 VCD (non-standard)". This is VERY important, because if you don't change the stream type your MPEG-1 video stream will consume the same space as a regular VCD even if you lower the video/audio bitrate. (This happened to me with a looong movie. Ended up being almost 2gbs...)
9. After you're done with the tabs click on OK, and back to the wizard. Now is that you get to set the bitrate so your video will fit. Prefferably, for entire movies I select 800mb for filesize. (Never use percentage of Disk, only estimated filesize.) If the video bitrate happens to go below 600-700kbits I suggest lowering the audio bitrate a little bit, but not below 160kbits if your source is stereo.
[NOTE: Yes, you can normanly burn 800MB worth of Mpeg-1 Data on a regular 700mb CD-R using Nero or any good burning program.]
10. After you have selected the optimum bitrate click next and proceed to encode.
11. After your file has finished encoding view and see if you're pleased with the result. If so, use a good burning like Nero and burn yourself a non-standard VCD.

Final notes: This method has WORKED for me with every standalone player I've tested it on. Keep in mind that these VCDs are below VCD quality standards, so don't expect anything above good VHS quality. Although the settings I've posted are the ones that work best for me, they could be tweaked further for better results. (Don't flame me if you mess up though...) Either way, most people arent capable of telling apart what QUALITY is (TV Scanlines can make almost anything look good), so this is a perfect alternative for all around use with DVD players if you can't afford DVD-R technologies.