lzText is undocumented because it's probably going to disappear when this type is subsumed into the new large data types implementation.
The Postgres group has promised an invisible upgrade. Jan Wieck (the first implementor to move to Great Bridge) did lzText some time ago, then took it out because it was felt his new large data types would be much more useful AND (important) done for PG 7.0.
Alas, he didn't find the time to finish the new large data type implementation for PG 7.0. A couple of folks (ummm, me, that is) convinced folks that lzText should go back in temporarily. As a compromise it's not documented, but yet is safe to use because of the transparent upgrade path that will be provided for PG 7.1. When PG 7.1 comes out, we'll want to change the datamodel for newcomers and rely on the upgrade path for us old hands.