So, you want to split it and compress it? Do you know what audio and video codecs are used in it?
You can probably cut it into two parts using AviDemux. Set your beginning and end points so that you cut the last half out and save the first half. So, put the first marker in the middle where you want it, then the second at the end of the video. Go to Edit, then cut. Then set Video Output to Mpeg4 ASP (xvid). Click on Configure and set the encoder to a two pass encode and the video size to 700mb.
If the Audio is already mp3, you can use it unchanged. If it is ac3 or aac, I'd convert to mp3 audio for an xvid avi file.
Your output format should be AVI Muxer and when you save the file, you should make sure to name your new file with an .avi extension.
Repeat the process, but cut the first section out and save the last half.