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Using Text Monkey I have been able to lighten up the pages, producing some long lines of code... some pages now 60 long lines instead of 1000 and 35% lighter.
It has been four months or so since I started doing this and no sign of penalty in my search engine rankings however in the last few weeks it seems that my page rank has gone down... so I ask the above question about line size.
I don't know when my site went down to PR4 but it may have been with this recent "bourbon" update. It could have been for many reasons besides the no-blank-space mod... changing the index page title too many times in three days after no change in a year? Bad back-links or dropped reciprocal links -- or maybe I just hadn't checked my page rank in the last eight months and it changed long ago...
The funny thing is that my site is still at the top of the lists, outranking PR6 sites for most applicable keyword phrases. It is even getting more traffic after recently turning my index page into a quasi site map -- using page titles for link text.
I've given up on the Google toolbar, even unistalled it the other day. It seems like its relevance keeps going downhill as the Google team tries to keep the SEOs in check. Using the pagerank feature has always made me a little paranoid... I think it lets google know if you are playing the game too much.
From rises in some of my competitors search engine placements, I think site size is playing a bigger role lately.
Anyways, off topic now... I do need to get rid of the crap dreamweaver code and add more content.
And, of course, traffic isn't everything... getting the fish to bite once it's there is the other key to success and a different topic entirely!
As tourz mentions, you don't need a lot of PR to rank - but light and clean code can be a help in many ways, and the discipline involved in creating it has many benefits.
Right now, when I need to modify the ugly code left after removing all the white space, I just use the "apply source formatting" command in DW.
After further reading I see a few people mention removing white space to lighten up their pages -- which is good as I have only come across one other site so far that is actually doing it.
I think I'll keep reading, thanks for the replies.