[ ignore this if you aren't in the mood to play around with your computer
  for a bit ... http://techhouse.org/~soren/help/xappsmaller.txt ]

28 MB for Fire.app (an OS X application) from source, huh ... my
distributed build of 0.31 is only 8.5 MB (6,437,146 bytes), according
to the Finder.

If your upload speed is capped at 128k (probably is), I suppose just
dragging the un-modified program onto your iDisk would take about 35
minutes (assuming that the number of bytes is near the 28 MB in blocks
that you are probably reading from the Finder's get-info window).

If you are feeling badass, I suggest copying the whole thing and then
trying to make it smaller:

(Note you can control-click the app in the Finder and "show package
contents" if you aren't feeling like poking around the .app using the
command line).

a) running 'strip -S' on the binary that lives at
   Fire.app/Contents/MacOS/Fire
   ... should have an effect on the size, removing debugging symbols.
   See the strip man page for details about -S and -x ... plain strip
   can break binaries like Fire that rely on plugins being able to find
   symbols inside of the app.

b) There are probably other binaries inside for the various libraries.  If
   you want to find them (I remove the two most common file types in the
   bundle; the \!'s are for tcsh/bash users), 
   find . -type f \! -name \*.tiff \! -name \*.html -exec file {} \;|grep Mach-O
   will do the trick after a while ... though with a bit more love
   (binaries rarely have extensions; YMMV):

   strip -x `find . -type f \! -name \*.\* -exec file {} \;|grep Mach-O|cut -d: -f1`

   will do all of the stripping for you.  Use 'du -ks' as you go along to
   see how you are doing on overall size.

b) If the app is localized, you could also delete the localizations
   since they might have lots of tiffs in them (Fire doesn't seems
   to have pretty small loc-specific pieces, but it's another 768k)
   ... those are in Fire.app/Contents/Resources/*.lproj ... just mv
   English.lproj out of the way first if you are going to 'rm *.lproj'.

   OR see if "get info" in the Finder lets you delete the localizations
   (it does on OS X 10.2).

Finally, to distribute, you can use a compressed disk image (as you
suggested).  In the examples section of the hdiutil man page (written by
yours truly), there is an example of how to make an image from a folder.
As of 10.2, the GUI convert to "compressed" option will make a UDZO image
(but it won't change the default compression level per below).

1) run disk copy
2) new blank image; 35 MB (to be safe; unused space disappears if you use HFS)
3) save the image somewhere with a temp name like Fire.rw.dmg
4) it should mount, if not; double-click it.
5) drag the app onto the mounted image volume
6) drag the image to the eject button in the dock
7) back to disk copy and select "convert image" (utils menu?)
8) select your image and make sure it will be "read-only compressed"
9) save it somewhere with a new name (e.g. Fire.dmg)

7a) go to the command line, cd to the directory with Fire.rw.dmg in it ...
    hidutil convert -format UDZO -o Fire.dmg Fire.rw.dmg

You can add a '-image-key zlib-level=X' to make the zlib compression
level X be higher than the default "1".

Let me know if this makes you images smaller.