This is looking like a bash redirection issue. It may also be issues in gzip and diff.
The lack of /dev/fd or simulation there of may also be an issue.
bash-4.3$ zdiff gzip.doc.gz
diff: -: illegal seek.
Related, make check for gzip is failing. Errors differ when gzip is run in debug or other diagnostics are enabled.
GEN check-local
./zdiff: line 81: 4: bad file number
diff: -: illegal seek
./zdiff: line 160: test: : integer expression expected
diff: /dev/fd/5: no such file or directory
/usr/bin/zdiff: line 110: cannot duplicate fd 3 to fd 0: bad file number
/usr/bin/zdiff: line 110: cannot duplicate fd 4 to fd 1: bad file number