Yes, you are proving intelligence if you invent the algorithm which compresses. If the prize was for inventing an algorithm that could then build the lossless c

Yes, you are proving intelligence if you invent the algorithm which compresses. If the prize was for inventing an algorithm that could then build the lossless compression scheme itself then you'd be onto something. But the prize is for the human who invents the better compression algorithm and proof of intelligence of the human would be self-evident.