Fraps doesn't compress video files. You already know that Fraps eats FPS on most computers, and imagine the processor having to use resources to compress the recorded video at the same time. Video compression/encoding actually takes up a lot of resources, so it would be impossible for fraps to shrink the video size as you record it. Therefore, you have to compress the video yourself.
Now, you'll need a program like VirtualDub to compress the file. Depending on the speed of your system, this could take a lot of time as well as resources, so don't bother playing openBVE or any other game to pass time
VirtualDub can be downloaded here:
http://www.virtualdub.org/Tutorials are on Youtube but where I am now, Youtube is censored so you'll have to find them yourself