regarding the result in farge et al's 2008 paper: On the structure and dynamics of sheared and rotating turbulence: direct numerical simulation and wavelet-based coherent vortex extraction
a guess about whats actually happening:
they evolve some numerical PDE approx for awhile, then make a copy where they do the CVE stuff, then evolve both copies some more. they then show that the difference between the two copies is small.
if their evolution scheme is dissipative (which almost all numerical pde schemes are to some extent right?) , then the high-freq components will be damped out like exp(-ct*|k|^2) where c>0 is some const given
by the scheme and |k|^2 is the squared l2 norm of the wavenumber. so after awhile (when they filter) there wont be much there for the top level wavelets to pick up, hence the 97% compression factor.
it looks like theres some other research on using wavelets for CVS, from a more numerical perspective. one notable guy is Oleg Vasilyev, who is at CU. Ive attached two of his papers on using wavelets for
grid adaptation. John found some more on CVS.