Sorry, didn't reply, because I thought I had answered that very question in my post.
The size is because it's basically replacing most of the odexed files in /system with deodexed versions... if that makes sense... so you're replacing a ton of files (I'm guessing all zipped up, about 50mb worth, as you put it)...
And yes, if you're looking to deodex, then this method will work on 2.3.340 (maderstcok is pretty much stock 2.3.340). Just be sure to follow the directions in the first post very carefully.
Other method I mentioned before, is to simply replace the entire /system directory with an already deodexed/rooted 2.3.340 build via this method:
2.3.340 Deodexed System only .zip — sephtin.com
Both should leave you with a freshly deodexed 2.3.340 system dir.