In my opinion, using xz for libpng was an idiotic move. By installing yet another mini-app, I save a few more bytes on my terabyte hard drive. Why not wait until the major players have incorporated it. This rant comes from the fact that most will spend more time figuring out how to extract the lib than it takes to install it. So does xz really represent progress? In this case the answer (IMO) is no.
Why have you hijacked this thread, and what on earth are you on about? Just download the LFS Live CD. If you want to ask questions about it (having read the documentation first) I'd suggest that you start your own thread in the Linux forum.