There is no need to use DXT5. S3TC takes up only half of the memory while it looks almost the same as DXT5.
And effects don't need an alpha channel. (Will they ever need it?)
I forgot to mention that only effects with the power of two can be converted to DDS.
I hope this didn't give you any trouble.
Here is a sample of the EFF use:
I've converted your frames. The quality loss is HUGE, as the frames had only 256 colors (for all frames), plus I had to resize them (up to 512²), plus the S3TC comression.
So if you it right, it should look superior to the ANI.
Download (EFF DDS, S3TC, 512², 74 frames, 9 MB, 4 MB zipped)
I did not cut out frames, but I've increased the fps. It will take up 9 MB in your gfx ram.
You might try to cut out every second frame. It might look ok with the higher fps value. Or cut out every third frame and blend two frames in to each other. (50:50)
Edit: My bad, it has 75 frames.
Open the *.eff file and change
$Frames: 75.