All things are possible through...

A function prints a form to each block that passes the block's id to a page that sets a session variable for the state of the block. Then the block reads the session variable and prints the content, or not.

I had to turn off the cache for this to work with anonymous users; which I didn't realize I would have to do when I was first creating this. If there is a way for this feature to work with the cache on then please let me know.

I originally thought the cache only cached the content of a node…boy was I naive…

Here's the module:

function minimize_block_menu() {
  $items = array();
  $items[] = array('path' => 'minimize_block',
    'callback' => 'minimize_block_page',
    'access' => user_access('access content'),
    'type' => MENU_CALLBACK);
  return $items;
}

function minimize_block_page() {
  global $base_url;
  $edit = $_POST['edit'];
  $rurl = $edit["rurl"] ? $edit["rurl"] : $base_url;
  $block = $edit["block_id"];
  
  //if the session has been set to 1 (minimized) then set it to 0, if not then set it to 1
  if($_SESSION['min_'.$block] == 1) {
    $_SESSION['min_'.$block] = 0;
  } else {
    $_SESSION['min_'.$block] = 1;
  }
  header('Location:'.$rurl);
}

//TODO: make the image change with the state of the block
function minimize_block_form_m($block_id) {
  $form_item = form_hidden('rurl',$_SERVER['REQUEST_URI']);
  $form_item .= form_hidden('block_id',$block_id);
  $form_item .= form_button('submit', 'submit', 'image', array('src' => '/image/main/icons/minmax.gif', 'title' => 'Minimize/Maximize (page reload required)'));
  return form($form_item,'post','/minimize_block',NULL);
}

and heres the block code

<div class="<?php print "block block-$block->module" ?>" id="<?php print "block-$block->module-$block->delta"; ?>">
  <div class="block-title">
  <?php if($block->region == 0) : ?>
    <div class="minimize-block">
      <?php print minimize_block_form_m('block-'.$block->module.'-'.$block->delta); ?>
    </div>
  <?php endif; ?>
   <div class="subject"><?php print $block->subject ?></div></div>
  <?php if($_SESSION['min_block-'.$block->module.'-'.$block->delta] == 1) : ?>
  <div class="content">This block is minimized</div>
  <?php else : ?>
  <div class="content"><?php print $block->content ?></div>
  <?php endif; ?>
</div>