In another post, I have uploaded and documented a minirt init modification handling cloop and squashfs transparently for the user, just using cheatcode "squashfs". It's for pure 64-bits, but the modification for 32-bits is trivial.
IMHO, present day squashfs seems to be about as stable, efficient and versatile as we need for this kind of use, and its widespread and growing use indicates others think the same.
So, with a "uni-minirt", KNOPPIX may still be distributed as cloop image, but subsequent remasterings will not have to unpack minirt.gz to make modifications in order to turn to squashfs. I think lots of remasterers will prefer squashfs, as it gives (at least) slightly simpler and faster workflow with at least as good results. OTOH. I can't see anything right now forcing us to use squashfs.
And, just for the record: This is not about the practicality or usability of cloop per se, but about the actual Knoppix use case.
HP Z840 Workstation 8-Core 2x E5-2620v4 64GB RAM, 2TB SSD Win11 NVS 510 #95
$349.99
Dell 9020 Optiplex Micro-Intel Core i5 - 1TB SSD 8GB RAM Window 11
$119.49
HP Desktop i5 OR I7 Computer Mini PC Up To 32GB RAM 2TB SSD Windows 10 Pro WiFi
$220.00
Dell OptiPlex 3060 MICRO DESKTOP PC COMPUTER I5 8TH GEN UP TO 32GB UP TO 2TB M.2
$295.00
Intel - Core i7-13700K 13th Gen 16 cores 8 P-cores + 8 E-cores 30M Cache, 3.4...
$449.99
Dell Optiplex 7040 Micro PC Core I7-6700t 2.80GHz 8GB 128GB SSD Win 11 Pro
$89.99
Intel - Core i5-13600K 13th Gen 14 cores 6 P-cores + 8 E-cores 24M Cache, 3.5...
$314.99
Intel Xeon CPU E5-2620 V4 2.10GHz 20MB Cache 8 Core LGA2011-3 Processor SR2R6
$2.84
CHUWI 13.3in Aerobook Intel Core M3 Laptop Computer 8GB 256GB SSD Windows 11 H
$151.99
Dell Optiplex 5040 MT Core i5-6500 3.20GHZ 8GB RAM 256GB SSD Win 10 Pro WiFi
$89.99