Due to security vulnerabilities in zlib built into rsync in the version included in TrueNAS and broken NFSv4 ACL support in rsync in upstream FreeBSD port, we switched to building rsync against the base zlib in freebsd. Per rsync manpage:
Note that if your version of rsync was compiled with an external
zlib (instead of the zlib that comes packaged with rsync) then
it will not support the old-style compression, only the
new-style (repeated-option) compression. In the future this
new-style compression will likely become the default.
The client rsync requests new-style compression on the server
via the --new-compress option, so if you see that option
rejected it means that the server is not new enough to support
-zz. Rsync also accepts the --old-compress option for a future
time when new-style compression becomes the default.
So it appears that we need to switch to -zz. Testing / confirmation will be required. This was reported by a community member.