Here are some examples:
Here is a WordPress 1.1 beta blog showing 300 posts.
Here is the same blog, cached with my method
Take a quick look at the bottom of the page for the generation times. The number in small letters in the center is for the main entries to be generated and displayed and the larger number to the left is the time for the whole blog to be generated.
A little more work is required to make this a functional hack. The categories and comments sections (along with archives and others) do not use the cache at this point to display the pages. Only the index page uses the cached entries and produces all the right links. Consequently, some more work is required to update the cache when some information is edited or added. This could include adding or editing a post or addition of comments and/or trackbacks. However, with a larger numbers of posts and links, this cache speeds things up quite a bit from what I can tell. I had to mess around with quite a few of the functions to get them to work correctly with storing a variable instead of echoing them. If someone is interested in the code, leave a comment or email me.
What do you think? Is this something worth investigating further?