I've noticed that Litespeed gzips /javascripts/all.js, but it does not send a gzipped version if the url is /javascripts/all.js?1201174518 like Rails generates.
gzipped version should be served, the query string part should be ignored it is a static file.
Please double check if the "Static gzip cache directory" is not full, by default is under /tmp/lshttpd/swap.