With Quicktime 7, Apple released/made available the H.264 codec, which is very good for compression while keeping quality (size is roughly half of what it otherwise would be). However, to view movies encoded with it you need Quicktime 7, which is still fairly new and obviously not too widespread (I think there’s only a beta available for Windows).
If you’re interested in giving that a try, though (and you’re on OS X), then a new version of FFMPEGX (0.0.9T) was released this week that supports H.264 encoding. (Don’t let that low verion number fool you; the program is rather mature.) I think you should be able to use that to convert your existing movie to an .avi encoded with H.264.