I haven't checked, but I guess they used something I've thought about for a while now: Open the ISO in a hex-editor, take a good guess of how much the game actually uses up, then erase everything from the start of the game data partition till the part where you think the actual game data starts.
So, for example, if you think the game uses 700 MB, delete everything from the start of the data layer till about 4000 or so MB in. This allows far better compression and shouldn't prevent the game from actually running, assuming you didn't accidently erase too much.
Now, I admit I haven't actually tried this theory, but I don't see why it shouldn't work.