That's RLL (Run Length Limited) encoding.

The compression factor is highly dependent on the repetitivity of your data. If there is no repetition, your data will actually grow..

How to decode?

while (data)
{
   read odd byte, 
   save as data_char
   read even byte
   save as counter
   until counter=0
   {
      send data_char
      decrement counter
   }
}

How much IRAM does it need? Depends on how you program it...

regards

Patrick