Agreed, you'll get a smaller resulting archive filesize using LZX in that situation.
I've had similar problems you describe in the past using LHA for archives containing thousands of small files. Extracting the resulting archive has corrupt files warnings.
The latest LHA update (ver 2.11) in July seems to have fixed this problem now. Available from Aminet.
I've tested it with situations where the old LHA would always fail. No problems I've found so far with the new one.
