Well a lot of the proprietary CD image formats are already compressed, the data is at least, but wouldn't it be nice to be able to compress audio tracks? I don't mean ripped to lossy formats, but maybe something like FLAC. Well I'm into some old school CD console games and emulation, I've even bought a few originals (one was a phony press from mp3s tracks, apparently, but that's another story). Whenever I have original audio tracks in a game like this, I usually extract the CD to the HDD with FLAC audio instead of WAVs and one emulator I use can actually fully run these games with audio through a CUE.
It's probably not going to happen due to the oldness and general lack of interest in old mixed mode game CDs unless I'd somehow do it myself, which is unlikely since I'm not a serious coder, but wouldn't it be nice to have a CD image format that can contain compressed audio in FLAC? I highly doubt it, but there is no such thing already, is there? I'm not to clear on the FLAC license but I think it's BSD (open source but it can be ripped off by companies), so couldn't a commercial program do something like this through that format?