Is the 18506 pages long lambda term the normal form? I wonder how much that can be minimized by not beta reducing everything.
No; the term has no normal form. It contains a lot of applications of the fix-point combinator Y. As a simpler example, here's a lambda term for reversing input: λ 1 ((λ 1 1) (λ λ λ λ 2 (4 4) (λ 1 4 2))) (λ λ 1) which similarly has no normal form.
let nil = \n c. n;
let cons = \hd tl n c. c hd tl;
let map = ...;
body
And compile it as: (\nil cons map. body) (\n c. n) (\hd tl n c. c hd tl) (...)
That we would get a more minimal form. But I cannot verify in what form the lambda expression in the PDF is. It just seems unbelievably large to me.