Sure. Use an archive manager application. For KDE, the standard one is Ark. For Gnome, the standard one is File Roller. Both open-source and installable from repositories, and they will certainly allow you to preview text files. I know that Ark is well integrated with other KDE programs to allow you to open just about any typical document you'll find in a tarball.
If you are talking about doing this in a terminal, then you just need use the tar command, which has many options, including that of filtering through bzip2 compression/uncompression. For more details, type man tar in your terminal.