Compressing a prototype plan to one manageble in a model is affected by many different things, starting with the design concept itself. What are you trying to model? Modeling the mainline of an entire division will require far more compression than modeling just a few towns. If you are including a major interchange yard, you will undoubtably have to simplify things to make maintenance and operation possible.
Since I've chosen to model the operations of one small city I have the opportunity to build a layout with a minimum of compression, even in a relatively small room. But it will still require some work to make it fit the space.
The first major change is compression by omission: The Berlin line will not be modeled. While I would like to include it, having three extensions to the layout will not fit easily in the space. In addition, it includes a fairly extensive yard which would also require a lot of space. I have considered including a second deck to model it, but the distance required to run between the two decks would be about the same distance between the station and the Whiting Street yard. So I wouldn't be able to model much more than the yard anyway.
The next issue is a question of how much I need to compress the rest of the layout. The entire arcade and station area, including the Mechanical Department facilities, should fit along hte 20' wall with no compression. If modeled to scale it's about 11.5 feet long.
The eastbound track is about half-a-mile, or 30' in HO scale. The westbound track is about 3/4 of a mile, or 45 feet. I'll have somewhere between 20-25' on each side of the station area to work with so some compression will be necessary. Additional compression will be required due to introducing the necessary curves to make it fit the room.
So the first thing I'm going to do is reduce all track lengths by 13%. Why 13%? Because in HO scale 1 real foot = 87 scale feet. Instead on this layout 1 real foot = 100 scale feet. This will have a minor effect on the design of the layout, only a reduction of 1/2 a 40' car per 100' scale feet of track.
I will make some additional space by reducing some of the longer tracks slightly, particularly where there are no industries with sidings.
I haven't finalized the plan, and the distances at this point are still rough estimates. But I should be able to include all of the industries between East Main Street and Curtis Street, with only two exceptions. The first is likely the Landers, Frary and Clark factory across from the station. I am considering some sort of hidden track, but switching will be very difficult in that event.
The other exceptions will be some of the tracks in the P&F Corbin division of the American Hardware Corporation on Myrtle Street, and portions of the Stanley Works complex, specifically the area past Buritt Street.
I am trying to determine what impact this will have on operations, since eliminating tracks, particularly of major industries, also changes the nature of operations. Most likely I will address this issue the most common way, there simply won't be cars for those industries.