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Lolz is still in use, it's still the best compressor for game data. But, it's still old. Most tools that we use are ancient.
About inflate + srep + compress - this correct. Inflation, or precompression is the step where the compression already on the game is reversed (decompressed) so that you can apply a stronger algorithm (srep+lolz/lzma). You need to use the correct codec for the game since not every game uses the same compression algorithm. When you decompress your archive, those resources are recompressed identically.
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