Took a closer look at this just now. It looks like the bundle is a tar'd tar file instead of a gzip'd tar file
From your error messages, it looks like you had that much figured out though.
The other problem is that control.tar should contain ./home/..., not /home.
To fix (on your zaurus):
su -
cd /usr/mnt.rom/cf/software (or wherever you put your ipk's)
mkdir treeline
mv treeline_0.8.1_sharp_arm.ipk treeline
cd treeline
tar xf treeline_0.8.1_sharp_arm.ipk
gunzip control.tar.gz
tar xf control.tar
rm control.tar
tar cf control.tar ./home
gzip control.tar
tar cf treeline_fix_0.8.1_sharp_arm
gzip treeline_fix_0.8.1_sharp_arm
mv treeline_fix_0.8.1_sharp_arm.gz ../treeline_fix_0.8.1_sharp_arm.ipk
cd ..
ipkg install treeline_fix_0.8.1_sharp_arm.ipk
So in the development bundle, edit the file 'make' on line 52 to be "./home" rather than just "home".