I've run into another couple of issues after I downloaded the OSX Lion installer from the App Store and compressed it.

First, it spends a very long time "reading archive contents".

Second, it says "compressed using Zip from 449 MB" which is wrong: uncompressed size is 4.75 GB. I looked around inside the archive and found out that TAB shows the InstallESD.dmg file inside it as 425 MB when the real size is 4.72 GB