> Bug 533038 has landed. Extensions are no longer unpacked by default when installed.
...
> Extension developers should note that they can opt back into unpacked installation by adding <em:unpack>true</em:unpack> to their install.rdf. Extensions with dictionaries, binary components, or window icons are most likely to be incompatible with packed installation.
Forgot to say: The blog post is
http://blog.mozilla.com/mwu/2010/09/10/extensions-now-installed-packed/