Serves me right for writing about code without checking first. You are quite correct, the "Compress Temporary Files" menu item converts all images that are not already PNG or JPG to LZW-compressed TIFF -- AND deletes all those that are no longer required -- thereby making undo/redo impossible.
However, the basic comment is still valid -- I could add a option in preferences to do work natively with compressed files -- but it would add conversion operations.
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