7-zip is probably the most popular free unzip software even though IZArc might be a better zip utilty. I think on every bootable Windows PE flash drive belongs an unzip software. If you have to download tools to solve your troubleshooting problem, then you will often need an unzip software to extract the utility from the downloaded archive. This is the only feature an unzip software for a rescue stick really needs. This is why I have tried 7-Zip Portable on Windows PE 3.0.
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7-Zip doesn't offer a portable version, but PortableApps.com provides a version of 7-Zip that works without installation. Actually, you have to install 7-Zip Portable once on your USB flash drive. But then you can launch the unzip software from Windows systems where 7-Zip hasn't been installed.
This also works on Windows PE 3.0. However, I had one problem with the free unzip software. You can only extract archives to the same drive from where you opened the ZIP file. In most cases this should not be a problem, though. If you want to unzip the archive to a different drive, you only have to copy the zip file to this disk first.