Thanks to Arnaud Launay for this bandwidth saver. The following should go in /etc/ftpconversions to do on-the-fly compressions and decompressions with bzip2. Make sure that the paths (like /bin/compress) are right.

 :.Z:  :  :/bin/compress -d -c %s:T_REG|T_ASCII:O_UNCOMPRESS:UNCOMPRESS
 :   : :.Z:/bin/compress -c %s:T_REG:O_COMPRESS:COMPRESS
 :.gz: :  :/bin/gzip -cd %s:T_REG|T_ASCII:O_UNCOMPRESS:GUNZIP
 :   : :.gz:/bin/gzip -9 -c %s:T_REG:O_COMPRESS:GZIP
 :.bz2: :  :/bin/bzip2 -cd %s:T_REG|T_ASCII:O_UNCOMPRESS:BUNZIP2
 :   : :.bz2:/bin/bzip2 -9 -c %s:T_REG:O_COMPRESS:BZIP2
 :   : :.tar:/bin/tar -c -f - %s:T_REG|T_DIR:O_TAR:TAR
 :   : :.tar.Z:/bin/tar -c -Z -f - %s:T_REG|T_DIR:O_COMPRESS|O_TAR:TAR+COMPRESS
 :   : :.tar.gz:/bin/tar -c -z -f - %s:T_REG|T_DIR:O_COMPRESS|O_TAR:TAR+GZIP
 :   : :.tar.bz2:/bin/tar -c -y -f - %s:T_REG|T_DIR:O_COMPRESS|O_TAR:TAR+BZIP2