When working on this[1], I spent three sleepless days shaving bytes from the included Brainf*ck interpreter. The last byte probably took about 5 hours.
Then I showed it to a security researcher I knew and he immediately replied "oh, this is so cool! also, you can replace the last four bytes with C3". Oh man, that hurt :-)
On Unix, an empty file is a working implementation of the "true" command (provided that is in the PATH and set as executable). This is because it is interpreted as a shell script, and an empty script of course exits successfully.
I'm pretty sure this was actually used in some Unix/Linux version, and they got bug reports due to the poor performance (executing a shell to do nothing), which makes for a lot of bugs per line of code. Unfortunately I can't find a reference. Instead I found that AT&T Unix implemented "true" as an empty file... with a copyright notice! See http://trillian.mit.edu/~jc/humor/ATT_Copyright_true.html
the smallest prod on pouet is a zero byte com file. of course it errors. With C3 you have skewed the definition of a program, already, anyhow. Edit: Queue the story of the empty dos program that was nevertheless useful to prompt the OS's program loader to do some memory management with useful side effects
That's a little misleading because what you described is a .COM file. They're limited to 64K, non-relocatable, and a holdover from the CP/M days. An .EXE is closer to an ELF in format. It's relocatable and necessarily larger in size.
http://www.muppetlabs.com/~breadbox/software/tiny/teensy.htm...
Also worth looking at is what the demoscene has done with binaries of 128 bytes or less:
http://www.pouet.net/prodlist.php?type%5B%5D=32b&type%5B%5D=...