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I have a lot of files, which are ranged from 735mb to 1.5 gigabytes. I´d like to burn each of those files to a single cd, but they exceed the capacity of every cd(700mb max). 2. Compress the ones that are data files or databases: but if I use zip software, in order to read em from the cd, it extracts the whole file to a temporary directory on my hard drive, which is time consuming. I want to be able to read the files on the fly, just like every "NORMAL" cd.
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There's squashfs filesystem that achieves exactly what you want. Gentoo Live CD uses it. Just if you are a little more into experimenting, you might try the eMovix distro.
But as an aside, you cannot fit 735 mb of an encoded (read XviD, Divx) video file onto a single cd. You might try for 800mb CDs if you can find them here, even then the 1.5 GB ones wouldn't fit. The max i've managed is 705 or 706 mb.
The best option you have for encoded vids, is splitting the videos onto multiple cds.
C