> You can't represent 1/50 exactly in binary
You can though? You represent the encoder state in fractions of 50. In practice, it means the encoder state will not use all possible binary strings. But you don't need to trade-off in approximation size.
I am not 100% certain, but pretty convinced you can work with much smaller encoder states of only a few bytes, achieving the same compression performance of chunk approximations requiring kilobytes in size of memory.