What about the webrequest AutomaticDecompression Property available since .net 2? Simply add:
webRequest.AutomaticDecompression = DecompressionMethods.GZip | DecompressionMethods.Deflate;
It also adds the gzip,deflate to the accept encoding header.
See http://msdn.microsoft.com/en-us/library/system.net.httpwebrequest.automaticdecompression.aspx