Yes, when you use it with the gz function, like so "ob_start("ob_gzhandler")" it compresses the entire output, and has the same effect as using mod_gzip, only without actually installing mod_gzip on the server. Great for shared hosting servers.
http://www.whatsmyip.org/forum/viewtopic.php?t=43
But what happens when you use both is the question. Will it break? Will it compress once and send, and the second gzipper will be ignored. Will it gzip the content twice, so that when your browser gets it, and gunzips it, its still compressed? I figure someone must know the answer, cause i'd rather not go through the hassle of installing mod_gzip if its going to cause me all sorts of problems.