wux is nice but still taking more space than necessary.
It compresses only the unused data and keep the game's data uncompressed for direct access without decompressing. but there are still 1GB of unneeded (compressed) data which could be used for something else on the SD (or any device).
that's a good format if you want to archive them
it's a compromise between lossless and efficiency.
It could be used as is by a loader, but it will require two things :
a layer to access the file (for each file : decrypt the disc, find if present, find location and point to its sector ... and the game expect the file to be decrypted. emulator can do it, I don't know if the loader can on the fly for big files), and a way to load updates if there's no way to read them from the console automatically, which means either reading the updates from a different folder or repacking the updates in the same way than wud single file to prevent having tons of files again.