The flash create should give you a one file nice compact package, yes.
I don't see much wrong with the command that you used to create the flash but I don't normally use '-c' (compression). I just use a bit more disk space!!
However, the flash is made up of various internal components and perhaps a good test would be to see if the system can split it into component parts with the command:
# flar -s -d <target directory for components> <flash archive>
One of the components output will be the cpio of all the files in the image.
If the flar split works without error then that would indicate to me that the archive is readable.