And it will be the most annoying thing in the world, especially for mac users. Downloading another application found on the internet to open these files will be an instant turn off from using the addon.

Really? Never been a problem for me. GUI Tar extracts it as easy as stuffit does ZIP... what am I missing here?

In my experience, GZ is comparable to ZIP, BZ2 somewhat better like RAR, but on the whole they all pale in comparison to the LMZA/PPMd (if mainly text) routines used in 7z.

Honestly, I'm not sure what the resistance to a better compression scheme is. 7z is supported (for extraction) by Winzip, WinRAR and 7-Zip on Windows, Stuffit and GUI Tar on OSX and in File Roller under GNOME, Ark under KDE and XZ Utils for command line, as well as being supported by GNU Core Utils TAR.

I'm not sure what the "pain for OSX users" refers to. I'm one myself. With GUI Tar installed, I just double click the 7z file and a period of time later (depending on the size of the archive) I have the extracted contents...

Seriously, if someone can't download and install one of those programs for their respective platform (and there's tonnes of other options to choose from) then they aren't going to manage to install Vanilla. As the actress said to the bishop, "It's not that hard".

It may seem that I'm more fussed about this than I really am (I'm not), but I would love to understand the reasoning behind "it's annoying/a pain for OSX users". I understand the point of having to "download another app found on the internet" but is it really than big of an issue? I mean people download stuff from the web all the time, don't they?

Meh. It's all moot, as if you use gzip in Apache to send the .zip files, you're probably sending less data than you think. http://httpd.apache.org/docs/2.2/mod/mod_deflate.html (Not necessarily supported by all browsers, can cause extra overhead, but still an improvement. Edit: Well, maybe not that much of an improvement on a .zip, but still...)

Anyway, here are the numbers from best to worst - bz2 fares quite well:

.7z 432,130 (your example)
.tar.bz2 565,750
.tgz 734,902
.zip.gz 868,273
.zip 906,684
.rar ???

Of the above formats, what are best known? ZIP. So I'd suggest using .zip primarily, and if you want to make extra work, then also support alternative formats (.7z, .tgz, whatever people want to upload) but I wouldn't require something other than .zip, as "it just works" for all operating systems from Windows ME onwards, no downloads required.