/etc/mime.types includes the assocation of application/x-gzip to .gz files. This causes Apache httpd to always send that MIME type with any file with that extension. Instead, it should send the type of the root name with the .gz stripped, and send a Content-encoding of gzip. (It does do the latter part.) To illustrate, create an HTML file and gzip it, for instance test.html.gz. Then attempt to serve it with a stock installation. Mozilla will offer to save the resulting file of type "application/x-gzip" instead of displaying the HTML. Remove the matching line from /etc/mime.types, restart httpd, and the file displays correctly.
Hm, I think this is more of a site preference; I know of many sites that don't want to start having tar.gz/tar.bz2 uncompressed on the fly by web browsers.