That would typically be referred to as an 8bit text conversion or something like that rather than VFW, but doing one would give you most of the info needed to do the other.
On "adequate space" then mostly that would be taken care of it simple pointers, assuming the menu stuff is not fixed length. For the DS you would tend to only do an 8 bit conversion if you faced memory issues; despite file sizes possibly being into the hundreds of megabytes if the game does not handle its memory well then you can come unstuck.
Anyway I was thinking more do you know what file the pictures of the characters are located in? Does the game automatically generate a new line or are they all manual? Little things like that, in most cases not massive time savers but do give someone feeling out the game a head start and you might have already known them if you have worked up the game a bit.
That said the letter spacing is massive in that. You don't have to go for a full variable width font (often a fairly in depth hack) and instead you could probably just make it narrower and gain some on screen space that way. Similarly for the menu stuff (is that three characters there on the biggest part of the second line?) you can try wedging multiple, or at least one and a bit, Roman characters in a single tile space in the font and bump things up there.
