jQuery 1.7.0 gzipped is 33K.
I'm performance obsessed since if our biz serves an additional 2K on our widgets it's an extra 1.86TB of transfer/month.
However for most on-site content, 33K is the size of a large image. Most delay loading a web page is caused by latency. Latency in the three way handshake to establish TCP connections and latency for each additional HTTP request even with keepalive enabled. Payload is not as big an issue because it needs fast throughput, not fast round-trip times which are impossible to achieve if you're far away from the server.
Smaller and faster are always good and always worth striving for (in coding). So I don't want to take away from this, especially since it means more eyes on jQuery. I think it's great work. But keep in mind that the speed increase is not going to be enormous and the cost is running a non-standard jQuery that lacks .css(), .ajax() and $(function()).