After burning a project's iPhoto 5 Library to DVD, I experimented with turning it into a catalog. Using Spotlight, I first found and deleted all folders named Original (caution: iPhoto movies are stored in these folders).
Next, again using Spotlight, I deleted every image whose 'pixel width' was greater than 240 (iPhoto's thumbnail size). Now the library contained only the thumbnails, and was a small fraction of its former size. iPhoto opened this library as normal, and while browsing, pressing '2' sets the view to the max thumbnail size. (If you use larger thumbnails, iPhoto shows pixelation, so iPhoto must enlarge thumbs when it can't find the real picture.) Also, you can still add new albums and keywords for further organization, although slideshows are a no-go, so you can have a convenient online catalog for your offline iPhoto media.
I think this might also work with an ongoing Library. Say, on an annual basis (iPhoto's folder structure makes this easy for Spotlight) you burn the year's photos to DVD then delete the pics, maybe leaving just the five-star pics for slideshows and desktop pictures, etc. You can still browse all your image thumbs for handy reference to your offline pictures.
[robg adds: It should go without saying, but just to make sure it's crystal clear. This hint will delete images within your iPhoto library! If you are going to experiment with this, please make sure you have a current backup of your iPhoto library before starting!]
Mac OS X Hints
http://hints.macworld.com/article.php?story=20060116102251498