Spaceless HTML Plugin

I’m a PHP developer, and I think it’d be useful and fun to make a spaceless HTML plugin.

What it would do is take the templates before delivery, and parse out all unnecessary whitespace from them. The HTML would come out as one-line. To see spaceless HTML in action, check out reddit.com and view source.

I’m not exactly sure how templating works in wordpress, but I can see that it’s just messy PHP (no offense). Do the templates get parsed before they’re delivered? Or are the function calls within the templates just echoing the content from the database?

If that’s the case, then I’d probably integrate the plugin with a caching solution.

Please point me in the right direction. Thanks for the help.