Had success in installing a minimal 95b with D-tools and required updates. Modified Jarvik7's excellent setup files so that 95b works with D-tools and its required updates (for example, the spooler is required by DX6.1; also, IE4 was missing required components for installation).
Follow 95b installation Guide on previous page, but instead with the attached patches against the setup files (for example, in c:\Win95 containing the .CABs)
-Patches include msdos.sys and system.ini modifications (Jarvik7)
-After entering 95b desktop, ensure updated drivers of recommended devices: S3, SB16, and V1 (+6mb)
-Install DX6.1 (+7mb)
-95b size with above components ~41mb (maximal 7zip* compression of disk image: 15mb)
Requirements for D-tools installation: USB supplement, InstMsiA (+5mb), copy riched32.dll to /windows/system; and IE4
-95b size including all requirements but IE4 ~55mb
-95b size after including IE4 ~85mb
-D-tools adds +3mb
D-tools loads (have to test it further) even after uninstallation of IE4: using Add/remove uninstalls IE4 even though no previous IE present
-note there are by-passable errors at end of IE4 uninstallation and during subsequent reboots
-IE4 required system updates totaled +2mb (subtracting 95b+IE4 size from 95b after uninstallation of IE4)
-95b+D-tools ~60 mb (maximal 7zip* compression: 19mb)
-Experimental: further reduction from manually removing INF files and IE4 directories ~54mb (attached "filelist.txt")
* maximal compression achieved by writing 0s to empty space on disk image; use dd tool on the disk image mounted in host OS, then try a command similar to this (your own responsibility; run from drive letter mapped to image): dd --progress if=/dev/zero of=zerofile bs=1M
It is possible to extract IE4 setup files by running "UniExtract". If the /Windows directory was compared before and after uninstallation of IE4, it would be possible to find the file updates, but a registry comparison would be necessary, too. This would save a couple of installation steps if IE4 was repackaged (manually editing ie4setup.ini and the .CAB inf files, filelist.dat; however, better to use an available IEAK4). Although, I doubt this would significantly reduce the 95b footprint and would require a lot of testing, including in 95b.
I also tried installing just the IE4 shell update (ie4shl95.cab files) without IE4, but this led to a boot error with Explorer; presumably additional files and/or registry settings are necessary.