However, further research shows that this in indeed possible.
As there is a standard for the physical dimensions of a CF card, the higher capacity ones will fit in the available space.
Theoretically, if you have the money, a 128GB Compact Flash card, like the one produced by Silicon Power would be possible. The price on that puppy would be well in excess of a couple of top of the line iPods though.
64GB is more financially viable, but still close in price to a similar size iPod but without the bells and whistles associated with newer machine.
32GB is probably the financially feasible size to go with.
The project does not seem that difficult, as long as you are careful and could actually be a fun project if you have a working mini laying around.