Regardless of the current file format, you can decompress both Unix format and MacCompress format files.
MacCompress will attempt to decompress files ending in ".Z" or ".z" and MacCompress files; these are the only files you will be able to see in the standard file dialog. When decompressing Unix format files, if the output file exists, you will get an error message. For instance if you try to decompress MyFile.Z, and MyFile exists, MacCompress will display an error message, and do nothing to MyFile.Z or MyFile.
For Unix format files created by "compress" on a unix machine, the resulting output files will have types as specified in the preferences list (see the options menu). If the file was created by MacCompress, the output file will be identical to the original file (file type, creator and flags preserved).
For all files, the output file is written in one contiguous piece if possible (i.e. PBAllocContig() is called), so compression followed by decompression may reduce disk fragmentation for individual files.