InteliTrace records all steps application went through. Hence crazy I/O.
From Wikipedia:
Unlike a traditional debugger, that records only the currently active
stack, IntelliTrace records all events, such as prior function calls,
method parameters, events and exceptions. This allows the code
execution to be rewound in case a breakpoint wasn't set where the
error occurred.[114] Debugging with IntelliTrace will cause the
application to run more slowly than debugging without it, and will use
more memory as additional data needs to be recorded.
In order to allow you to backtrack during debugging it records how and when memory was changed so it can revert it to previous state when you step back in code (as opposed to classic debugger where you can only step forward).
By processing 800MiB of data you pretty much force IntelliTrace to record how it went through memory, together with all variables you use during decoding (multiplied by times you changed it - eg. loop length).
The answer to your slow debugging issue in InteliTrace is limiting what it saves, or even better, creating test environment. You can try making Unit Tests and/or test data file (much, much smaller than your current blob).