As Homebrew NSP and XCI files get larger and larger, compression support is a welcome feature to be included in Yuzu. The code is already implemented here: https://github.com/nicoboss/nsz so I am hoping this feature could be included and implemented in Yuzu as well.
As I could not find any feature request for NSZ or XCZ feel free to review this , or close the issue if it is not going to be supported. I can understand any reasoning that argues for or against it, so please let this issue be a way to communicate the official Yuzu answer for this feature request.
We're dedicated to emulating the Nintendo Switch System, these formats(NSZ, XCZ, NCZ) do not officially exist on the system. They have not been thoroughly tested and have quite a bit of issues with them, because of this we won't be seeking to add support of these extensions.