Kopia server taking too much ram->swapping

You can see some benchmarking statistics for the different compression algorithm at Compression | Kopia. Since you are low on RAM, I would pick one that uses less memory.

ztd is the algorithm that provides one of the best compression ratios with very good speed, but RAM usage is on the higher side. Looking at Compression | Kopia, gzip uses very little RAM but it is very slow. pgzip is the middle ground – less RAM than ztd but more than gzip with decent compression ratios and faster speed than both. May I suggest you try pgzip to see if your server can handle that? If not, change it gzip.

Changing the policy now would change compression on all future uploads. Kopia will not go back and recompress already uploaded files. Deduplication should still work.