I propose this as a minor improvement to the built-in server, like the support of browser cache that will be included in Python 3.7 (issue #29654, PR #298). I understand that the server is not supposed to be full-featured, but HTTP compression is widespread, reduces network load and is easy to implement (the code will be very similar to SimpleXMLRPCRequestHandler).

Content-Encoding is used because it's the most simple to implement. Chunked transfer for large amount of data seems to me to be out of the scope of the built-in server.

Content-Length is set to the length of the compressed data. I don't understand your question about persistent connections : the proposal covers a single request / response sequence, it doesn't depend on the underlying TCP connection being reused or not.

From what I understand, issue #1508475 refers to the http client, not server ; and #4733 refers to another meaning of encoding (conversion from characters to bytes with a charset such as utf-8), not to HTTP compression, which unfortunately also uses "encoding" in headers names.