I don't think it'd be cheating, just like using programs to compress files isn't cheating.
However, there's two ways to look at this.
1) designing "some kind of data" specifically for this problem.
2) a general-purpose solution, where you could could put any data on the paper.
You could hit some obscenely-high number for 1), using some tricks or whatever.
But 2 probably has some sensible solution on the order of MB.
Example: if our function is as simple as "raise each number in the sequence to the next" we'd get some obscenely-large number, and we can put that function right on the page.
But, finding an obscenely large number representing some kind of data that actually means something, then coming up with a rule like that to reduce it?
Anyway, my argument would be: no, having an external compression algorithm isn't cheating, but formulating your data to fit the problem is.
Anyway, there exists no general-purpose compression algorithm, so compression would largely be out of #2, unless we're taking a subset of the problem: "how many English words can fit..." which of course we can come up with a good compression algorithm for (I think!) which would make it work.