It all depends on how the source video is encoded. If you're starting off with a highly-uncompressed format (e.g. ".dv") you can do a lot of compression without (significant) loss of quality. If you're starting with something highly compressed, you're going to start sacrificing quality to compress it further.
FFMPEG can convert among various codecs, bitrates, etc. For example, if you have a 6Mbps MPEG file which you want to compress to about 1.5Mbps (which would likely not represent a noticable degradation), you could do something like:
ffmpeg -i myinputfile.mpg -b 1500 myoutputfile.mpg
http://ffdshow.faireal.net/mirror/ffmpeg/