Yes, on small heaps you are still forced to use a 64bit pointer instead of a 32bit pointer, which means that your per-object overhead is higher, this means that on "normal" heap sizes, < 32Gb, you end up paying a reasonable penalty.
That said, for a lot of use cases, this is still a reasonable trade-off to make, but it probably won't be promoted to "standard" until it's better in all use cases.
ZGC relies on the space of 64-bit pointer (and the size of the 64-bit virtual address space) for its pointer coloring algorithm, and so it is by definition incompatible with UseCompressedOops even at small sizes.
I suppose it's possible to fix this with a change to the design in some way. But if you have a heap smaller than 32GB, the existing G1 would probably work well too. ZGC shines much more on very large heap sizes since that's where long tail GC latency often hits hardest.
That said, for a lot of use cases, this is still a reasonable trade-off to make, but it probably won't be promoted to "standard" until it's better in all use cases.