I think your concern is dealt with in the immediately following section:

>The Y parameter is the compressed content (the output from a prior call to sqlar_compress()) and SZ is the original uncompressed size of the input X that generated Y. If SZ is less than or equal to the size of Y, that indicates that no compression occurred, and so sqlar_uncompress(Y,SZ) returns a copy of Y.

The format stores both the possibly compressed blob and the original size. From those two pieces of information it can always return the correct original file.