You always need resource limits when dealing with untrusted data. RAM is one of the obvious ones. They could introduce a memory limit parameter; require passing --long with a value equal to or greater than what the stream requires to successfully decompress; require seeking support for the input stream so they can look back that way (TMTO); fall back to using temp files; or interactively prompt the user if there's a terminal attached. Lots of options, each with pros and cons of course, that would all allow a scenario where the required information for the decoder is stored in the compressed data file