This is a Flash video which is 124K.   It is 120pixels by 90 pixels and here you are seeing it stretched to double that size.  It is 10 seconds long which means a one minute video will be about  750K which is getting close to that 1 meg limit we were talking about. 

To get this I started with the video at it's original size.  It is generally best to compress a video only once (lossy compression on top of lossy compression is not good).

I used Visual Hub with these settings: Select Flash, then Raw .flv format at standard quality.  Then select Advanced.  In the Advanced window select 120 by 90 for size, 56K for bitrate, two pass and for audio select mono.  In this case I also selected "autocrop" but you can just leave that alone if you want.

It took 24 seconds to compress the video. 

You can download and purchase Visual Hub (for Mac) on the Techspansion Website .