From wikipedia:
Cinepak is a lossy video codec[1] developed by Peter Barrett at SuperMac Technologies, and released in 1991 with the Video Spigot, and then in 1992 as part of Apple Computer's QuickTime video suite. One of the first video compression tools to achieve full motion video on CD-ROM,[2] it was designed to encode 320×240 resolution video at 1× (150 kbyte/s) CD-ROM transfer rates.
So 2h34min at 150 kbyte/s is almost 1.3Gb. It cinepak is (at it seems) a fixed bitrate codec, there is no way to put your movie below 1Gb. It won't matter if you use ffmpeg, virtualdub, TRMOOV.EXE or the official encoding tools. To achieve 2h34min below 1Gb, you'll need a codec that can encode your video below 113 kbyte/s. Also, as I said before, more resolution means more size (for a given codec) but it seems that your tools already resize the video to fit in 320x240.
This can be easily done with any mpeg4 encoder, but you won't find any Windows 3.1 player that supports mpeg4 and no machine from that era will have enough CPU power to decode it.
I guess Intel Indeo will probably work in Windows 3.1, but I don't know which bitrates can you achieve with it. MPEG1 is aimed to put VHS videos into CDs (about 1hr/disc), but can be forced to use lower resolutions and bitrates... and some fast machines form that era (Pentium, but that's Windows 95 era) may decode it without additional hardware. MPEG2 and MPEG4 (that including DivX, Xvid and "proper" mp4 codecs) will need CPUs that nobody used with Windows 3.1.
I have traveled across the universe and through the years to find Her.
Sometimes going all the way is just a start...
I'm selling some stuff!