The DLC comes in a file called DLC1.zip or something, right? I'd just like you to rename that file so it has a .pak extension instead of a .zip extension, and see if it still works.

If Crytek distributes this file as a .pak instead of a .zip, it would prevent a lot of confusion. Telling you where to put the file on the download page would be another good step.

It actually is a compressed file as the game extracts it into folders/files after the game is launched.

here all you need.
http://www.gamesas.com/forums/viewtopic.php?f=40&t=27424