Ignore the previous post. The mke2fs line was wrong.
Now I use the following script to shrink the minirt2*.gz file after
modifying linuxrc and other files inside minirt26.gz.

shrinkminirt.sh
Code:
#!/bin/sh

DEST=../master/boot/isolinux/
MFILE=${DEST}/minirt26

gunzip ${MFILE}.gz || exit 1
mv $MFILE ${MFILE}.old || exit 1
dd if=/dev/zero of=$MFILE bs=4096 count=1125 || exit 1
mke2fs -L "KNOPPIX miniroot" -b 1024 -N 8192 -O none -F -q -m 0 $MFILE || exit 1
mkdir $DEST/old || exit 1
mkdir $DEST/new || exit 1
mount -o loop ${MFILE}.old ${DEST}/old || exit 1
mount -o loop ${MFILE} ${DEST}/new || exit 1
cp -a ${DEST}/old/* ${DEST}/new || exit 1
umount ${DEST}/old || exit 1
umount ${DEST}/new || exit 1
rmdir ${DEST}/old || exit 1
rmdir ${DEST}/new || exit 1
rm -f ${MFILE}.old || exit 1
gzip --best ${MFILE}
Just change DEST to the path to the boot/isolinux dir on your drive.
Change MFILE to ${DEST}/minirt24 to shrink the minirt24.gz file instead.