Hello Doug
GZIP compression is certainly supported by Internet Explorer and I would guess by recent releases of many of the other modern browsers such as Netscape and Opera.
There is great advantage in HTTP compression because clients only have to download pages that are a fraction of the size of uncompressed pages. This makes the site feel much more responsive to the end user.
HTTP compression reduces the amount of Internet traffic generated by a web server. This is a good thing if your organisation has to pay for its bandwidth per megabyte. The more traffic your server sends, the greater the saving.
Another advantage of HTTP compression out of the server is for XML applications. XML and SOAP output is notoriously porky and a great bandwidth hog. HTTP compression can make XML/SOAP applications far more responsive because much less data needs to pass over the network.
So its not so much about router to router traffic but much more about the amount of traffic coming out of the server and also about the time that it takes to receive an HTTP response.
Most other major web servers support GZIP HTTP compression to some extent.
The tradeoff is that your server has to do more work to compress the outbound data, but hey, compute cycle are cheap these days aren't they?
http://www.microsoft.com/technet/treeview/default.asp?url=/technet/prodtechnol/iis/maintain/featusability/httpcomp.asp
"The Benefits and Drawbacks of HTTP Compression"
http://www.cse.lehigh.edu/techreports/2002/LU-CSE-02-002.pdf
Cheers
Andrew