I asked this question before the final WP7 platform was released and never received a definitive answer from the team - it appears that the http stack in WP7 DOES NOT support compression. The way I found this out was by using fiddler while running the emulator - when I request an ODATA feed that is compressed when received by Silverlight3/4 - is not compressed when received by an WP7 app.
Does anyone have confirmation that the Silverlight HTTP stack on WP7 DOES/DOES NOT support http compression?
thanks Michael