So can this technique also be used to use with other compression algorithms like the hutter prize winning starlit, used to make a self-extracting wikipedia copy with state of the art text compression?

I like the idea, but you could also mount a file with a compressed and perhaps also encrypted filesystem (btrfs or zfs) and serve the contents through a portable lightweight high performance web or gemini server, or even modify a webserver to serve a compressed website in a single file?

It somehow reminds me of the seaside web framework contained in a single file smalltalk image even though the concepts are very different.