Yes, but was it done by checking the box next to "Entire drawing"? This is more effective than doing a regular wblock and actually choosing the objects, with the added plus of doing both layout and model at once.
Another big help is deleting layer filters and annotative scales, which can both accumulate like a virus.
Also, using the command line "-pu" (dash purge), and "R" for regapps can get rid of some memory hogging junk.
I think those were mentioned previously, though you've clarified a good use of WBlock for anyone who'd come into such a situation.
The issue with the OP's drawing is unfortunately not cleared by any of those options. I think only a WBlock of selected entities removes the DGN dictionary (unless you've selected something which is tied to that dictionary). The issue seems to be that the dict, keeps all sorts of info about the entities imported from MicroStation and doesn't release this if those entities are erased. A WBlock of Entire Drawing includes all those dictionaries under the named object dictionary if they're not empty. Otherwise the -PU RegApps should've cleared it already.
As for why you'd want the file smaller. It depends on what data is actually in that dict and if you can ever really use it for something you'd want to. Generally though, this looks like useless data - seeing as it's something to do with MS, obviously nothing which ACad can do anything with. I might be wrong, but it doesn't appear so. Anyhow, the OP wanted the file smaller. He got it smaller, and now seems happy about it - so obviously that data was useless to him. Perhaps later he'd come across a scenario where it might make sense to keep the hidden dictionary full of who-knows-what, but at present there's no reason to. It simply uses up hard-drive space, RAM, makes the DWG run slower and causes issues when he wants to send it to someone (email would have similar limits as he's found when trying to attach the file to this thread - not to mention bandwidth is used up for no apparent reason).