That was just an idea I got when playing one game a few months ago. While that game didn't use word compression for storing thext it was actually using word compression for encoding some text for certain ingame puzle. So to solve the puzle you had to conect proper words with their indexes.
As for optimizing Memo like component that I have designed for my Silver GUI library I render the whole text once to some RenderTexture and then just reuse that texture for further rendering of the Memo controll. This even comes in handy if memos render texture exceeds the size of the memo itself (more text that it can fint inside the memo) since I can only do partial rendering of this texture to represent memo controll.