First of all, the textures probably are already compressed, so compressing them more doesn’t do all that much. Secondly, streaming is just downloading, so you can just compress the stream. Sure you might lose a little bit of compression possibility when you don’t present it as one big archive. But that probably saves way less than the tricks I mentioned before.

They literally picked the highest bandwidth way to do this.

No they did not, you have to download it either way… And streaming the render output is not at all the same as rendering locally on your own PC. Neither as an user experience nor as a cost benefit for Microsoft.