Norman should check his information before posting! The BAA site simply gives the maximum measurements and doesn't differentiate between 'compressed' and 'expanded' sizes.
My flight bag seems to be similar to that owned by Joko's sister and I've tried to find this information for myself. There doesn't seem to be a definitive answer available online. I think that the bag would be acceptable if its 'compressed' size met the requirements. This is based upon the assumption that, rather than getting a tape measure out, the airport staff will simply check that the bag fits inside a metal framework of the relevant size. (That's what they used to do with cabin baggage before the current regulations came in). All the same, I'd advise phoning the airline just to make sure.
If Joko's sister isn't travelling until next week, she'll find that larger items of hand luggage will be permitted anyway. It was mentioned on the 6 o'clock news, on Radio 4 this evening, that the Department for Transport are about to relax the restrictions and permit larger items of hand luggage. Unfortunately, the precise measurements which will apply, from next week, have not yet been determined.
Chris