Your post was from quite some time ago, but I am finding that the SetLogHistory (false) is working as expected in arcpy. I am not finding any additional XML inserted into my GDB_ITEMS documentation column for the workspace after executing a compress after arcpy.SetLogHistory(False). Let Support Services know if you are encountering this as an issue.
>>> arcpy.SetLogHistory(False)
>>> arcpy.Compress_management(r'Database Connections\sqlserver - blakley - 10.3.sde')
<Result 'Database Connections\\sqlserver - blakley - 10.3.sde'>
>>>