Reduce the size of the Arduino bootloader?
There is an actively developed free and open-source Arduino bootloader / firmware called OptiBoot, that might be of interest. From their site:


  Optiboot is a quarter of the size of the default bootloader, freeing 1.5k of extra space.


Many Arduino / clone boards now ship with OptiBoot instead of the classic Arduino firmware, though not necessarily with the latest and greatest version of OptiBoot. Existing boards can also be upgraded with OptiBoot if desired, procedures are documented at the linked site.

Also worth a look are the various bootloader enhancements on the AdaFruit web site. Not having personal experience with these, I can't really say much about AdaBoot, though.