This would actually be preferable to how DNA seems to evolve. In most systems, there's actually quite an acute constraint to genome length due to the Error Threshold; when a genome gets too large, it has too many mutations and therefore the 'fittest' genome, often called the 'master' genome, cannot be sustained in the population. Therefore, there's quite a lot of evolution where the genome becomes essentially minified. Most often, this is done by overlapping genes on the DNA, (mostly by shifting the reading frame by one or two nucleotides for one of the two genes).