Well it's Windows to the rescue! I used TestDisk to extract an image of the HFS partition from the Zip disk.
Then I renamed image.dd to image.hfv and selected it in the Basilisk II GUI. Booted up and Mac wants to initialize and I click Cancel.
Disk First Aid fixes a b-tree problem and the disk mounts. I have Norton Utilities on the Zip so I copy it over to the image Basilisk is booted from and run Disk Doctor on the Zip image, which fixes some more errors.
So now I should be able to format the disk as a FAT volume in Windows, then Erase it to HFS in Basilisk.
I love this utility, saved me big headaches a few times. http://www.cgsecurity.org/wiki/TestDisk_Download
DOS, Windows, Linux and OS X versions.