There is a zip/unzip option in the context menu so is it accessible from the command line?
No it doesn't by default, but check here to do it anyway: http://stahlworks.com/dev/index.php?tool=zipunzip
Yes and no.
would open the file in the explorer as a "compressed folder" similar to clicking open a zip folder
There is no other entry point in zipfldr.dll that allows decompressing files directly from command line. I would suggest using the 7zip command utilities or unzip.exe as these are free (as in freedom as well as in beer)
If you already have Java JDK on your PC, and the bin directory is in your path (in most cases), you can use the command line:
Complete set of options for the jar tool available here.
Extract jar file
If you don't have JDK installed I would recommend installing 7-Zip, since it's very lightweight: http://www.7-zip.org/