For all we know it actually worked that way. Steam definitely decompresses game assets at install time. The people complaining about game sizes aren't looking at the depot files you download when installing the game, they're looking at their HDD (which is fair!)
My guess is Valve doesn't offer a 'decompress your ogg files to wav at install time' feature though.
My guess is Valve doesn't offer a 'decompress your ogg files to wav at install time' feature though.