Gregg,
I tend to favor generating unreadable binary files (such as .zip) at runtime but if that's not feasible, then I'll shove them under "src/test/resources" (I'm nowadays mostly using the
Maven Standard Directory Layout).
I'm not sure if I understand what you're asking here:
Along these same lines, aside from testing whether or not the specific util method craps out, is it ok to do something like...
File file = new File("assumed/unzip/location");
Assert.assertTrue(file.isDir());
...but I'll answer something anyway
I generally use the system temp directory for any file system residue from my tests rather than a path that's relative to the project root.