If your having a size problem, you could go with a lower rated resistor, for example 1/4 watt vs. 1/2 watt resistors. You're pushing your luck when you drop it too low, as resistors tend to snap / crackle / pop when they get overloaded.
Also, FYI, LEDs are more current-driven than voltage. Don't worry too much about the operating voltage across the led being different from the actual voltage drop you're using, as long as you don't run more than, say 25 mA through a LED.
