I think so, specifically lossy compression though.
A modern version of the book would include an extra section in the 'Lossy compression' chapter - 'Text' (alongside Images/Video/Audio) that would discuss LLM's.
An LLM can give you a probability distribution for the next token. You can pair that with arithmetic coding to get a lossless compression/decompression algorithm. See https://en.wikipedia.org/wiki/Arithmetic_coding
No, it's not for lossy compression only.
An LLM can give you a probability distribution for the next token. You can pair that with arithmetic coding to get a lossless compression/decompression algorithm. See https://en.wikipedia.org/wiki/Arithmetic_coding