I'm also wondering whether the GNU system should recommend using zstd instead of or in addition to xz for compression purposes.
I'm not sure GNU explicitly recommends anything. Although the tarball examples in standards.texi and maintain.texi all use gz, I don't think even gz is explicitly recommended. (Which seems ok to me.) Personally, I would support lz4 over zstd simply because more GNU packages already use lz4.(*) Both lz4 and zstd are quite a bit less resource-hungry than xz, especially for compression. I don't know if there is a technical reason to prefer zstd. In general, I think it can continue to be left up to individual maintainers, vs. making any decrees. Automake supports them all (among others). --best, karl. (*) Looking at a listing of ftp.gnu.org, I see only gmp using zst, and perhaps a dozen or so packages using lz. Basically always in addition to another format.