Reducing a single bubble sort in code size doesn't do much, because it is used many times and its code size cost is well amortized. However, if you had many bubble sorts coded in your program with special cases, then consolidating those into one very abstract/parametric version could be a big win.

The reduction comes from making the code way more abstract and much more difficult to reason about in concrete contexts. So ya, it is probably possible, but no, our heads might not be very capable in writing/maintaining/debugging such code even if the computer could execute it. As an extreme, consider "very small code" contests in the demo scene, where various crazy tricks (self modifying code) are used to drastically reduce code sizes, none of which would ever be used in practice and have little SE value.