Yes, it's been done: http://www.axyz.com/sys/router/spacemaker
I have this thought...what if you build a CNC router that is configured more like a vertical panel saw instead of like a table. You know...angled at like 75 degrees and snugged up to the wall. A 4' x 8' sure would take up a lot less floor space. What kind of issues would you run into? Gravity is not necessarily your friend any longer. I don't see it having a huge affect on your x-axis. You may want to rotate or modify your bearing system a bit. I also don't see it having a huge affect on your z-axis. Your y-axis is now going up and down hill. That could be a big deal, but I'm not sure. You might even be able to come up with a way to counter weight it, or give it pre loaded springs like a garage door. Has anybody seen anyone build one like this before? Anyone know of a commercial maching that works like this?
I did look into this configuration for my cnc router that i am currently building. I think the gravity issues as they pertain to the drive mechanics could be solved using a counter weight as you mentioned, or just finer drive gearing to prevent the tool from falling during power down. I found that the largest shortcoming of this design for me was that when machining pieces that would be cut free you would always have the problem of the piece falling on the bit and ruining the work. With some extra care in your gcode you could try to insure that the cutter finished on the top of the piece; however, this would be quite annoying. If you went with this design i would be prepared to incorporate a vacuum holding system.