Has anyone tried this on a Steam Deck yet? Is it just a matter of adding the .bat file as a Steam game (along with the .z64 instruxtions) so it runs through proton?
The .bat is for extracting the game data from the rom. As the readme unclearly says: you need to run the .bat to make the data files (the .OTR) you need to run the game, then you run the .exe to play.
Can't speak to proton compatibility, but I would be surprised if they don't release a Linux native version as well. Just give them some time, this just released and they are apparently still missing the .sh file for extracting the .otr on Mac.
These ports don't tend to be one and done releases, they get updates/bug fixes/upgrades/additional features over time.