Good question! Since the game is mostly scene-based, it should be possible to play it scene by scene with lots of reading from disk. However the original game also had some larger scenes that used quite a lot of horizontal scrolling (some backgrounds for those scenes can be seen under "A collection of backgrounds from the game" in the article), not so sure about those...
Speaking of that, I'm really curious how many 170 KB C64 floppies it would need to store the whole game.
The large scenes looks like about 4 screens wide? But they're not full height - looks like about 2/3, so let's say ~24KB total including color data. I don't think it should be a problem. The walk + scroll is slow enough that if you had to (and I don't think you do) you ought to be able to time things so you can load the next screen while the player is walking.
Similarly, e.g. slow down the door animation, and a fade, and you ought to have enough time for a decent fast loader to load the next screen (~2-3 seconds assuming you're loading 2/3 of the screen)
You really benefit from the low amount of action on screen here.
If you want to actually compress the data to reduce the number of floppies, you'd slow it down quite a bit. If you were doing it for a real C64 or cartridges constrained to what was viable at the time, that might well be preferable to more floppies. If you're doing it for a modern cartridge or an emulator, it won't matter.