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You can shrink the tab height further with userChrome.css. [1]

Putting this into there should shrink it down a bit further:

  @namespace url("http://www.mozilla.org/keymaster/gatekeeper/there.is.only.xul");

  #TabsToolbar {
      height: 24px !important;
      --tab-min-height: 24px !important;
  }

Obviously, you can replace those 24px with even smaller values. it just starts to look silly at some point, because the icons get squished. There's probably a way to tell those icons to scale down differently, if you do want to go even smaller.

You can load the URL "chrome://browser/content/browser.xul" to get the browser UI displayed like a webpage, allowing you to easily use the devtools to inspect the different CSS identifiers, so that you can mess around a bit by yourself.

[1] http://kb.mozillazine.org/index.php?title=UserChrome.css