The problem is space. Connectors/boards/cables take up room. Except for some space that can be gained by removing the HDD black rubber shock mount and the cover to hold the HDD, there isn't much space to be gained in the LE1700 -- the area is packed tight. I think 1.8" SATA HDD are also 8mm longer in length (maybe not).
Still, I can imagine a custom solution if one is willing to solder (anyone at Motion Computing reading?). Basically, find the smallest ZIF/SATA bridge adapter, remove the bulky connectors (maybe keep the ZIF one if it is oriented properly in respect to the Motion connector), hope the board is thin enough to fit and carefully solder using a fine tip low wattage iron and connecting wirewrap wire. Using a 5mm drive (HDD or SSD would help).
Toshiba has 1.8" HDD drives in 250GB MK2529GSG and (forthcoming) 320GB sizes but they're SATA.
Motion Computing LE1700 XGA VA, Samsung HS160JB 160GB HDD, 4GB Crucial RAM, Gigabyte GN-WS30N-RH 802.11n WiFi.
Motion Computing LS800 VA (undergoing updating and upgrading)