It undoubtedly would make pg_dump smaller, though I'm not sure how much
that's worth since if you care at all about that you'll gzip it.
But, the other thing it might do is speed up COPY, especially on input. Some
performance tests of that might be interesting.
For what it is worth:
Ascii85 (aka Base85) is used in PDF by Adobe, with a prefix "<~" and a
suffix "~>". It codes 4 bytes as 5 ascii characters, i.e. a 25% loss.
There is also Z85 which avoids some special characters: backslash, single
quote, double quote.
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