Dynamically swapping compression like that probably isn't worth it, as now the decode tables are extra state that needs to be compared against, all while inside a critical path.

But most modern RISCs do take a sort of Huffman encoding perspective on ISA design, starting with SH, into Thumb(2), and into RVn-C. I do agree that there's farther we can probably go; stuff like memory referencing ALU ops can be thought of as a way of addressing PRF registers without using any bits in the instruction stream for instance.