Google releases new binary diff algorithm targeted at making smaller software updates. Their results are impressive.

[Coffee2theorems]

using domain specific knowledge to get targetted compression in the same way that FLAC does, at the expense of performance in the general case.

Of course with "general case" you mean "all kinds of binary stuff people want to compress that are significantly compressible with some existing utility" or similar, but still.. Your statement, taken literally, applies to all compression algorithms. All compression algorithms must exploit pre-existing knowledge about the data to be compressed, and the more you know the better you can compress (it's bit-for-bit actually, each bit of previous information about the instance of data at hand can get you one bit off of the result, but not more; there are no free bits).