If you get the Illegal Character error, it very likely means that the file was still getting served without “Content-Encoding: gzip” flag, so it sounds like the htaccess file was not getting used. You can verify that by using the Network tab of Firefox Developer Tools, in particular the Headers view of the request (see Network Monitor — Firefox Source Docs documentation). That list should show “Content-Encoding: gzip” present in the “Response headers” section, next to Date, Content-Type, Content-Length and so on.
You can cross-reference by using the Network details tab on the page http://mzl.la/webassemblydemo, which does use gzip compression with the served files (that one is hosted with Amazon AWS S3 service)