"Not that great at all" doesn't begin to describe how awful Providence's train station is. It's crumbling. The
ProJo had an article on it a while back. Architecturally, it's a shit hole. However, it is not "suburban." The rails are underground and dense urban development was not only encouraged, but promoted. It is an easy walk downtown and that's where Portland could learn.
As far as the station causing all of that growth, I don't know. Providence's train station may not have had all the development around it in 1986, but it was still sandwiched right in between downtown (an easy walk) and the State House (not to mention it's on the riverfront too). That area was naturally suited for downtown-like development with or without a train station.
Still, the Jewelery District was on the other side of downtown and was much more built up to begin with. Logically, it looks like an area that would redevelop first given the existing density. The station may be one of the primary reasons most of the development took place where it is now vs. the Jewelery District. The Jewelery District is only now seeing some serious redevelopment (coincidentally at the same time I-195 is being removed from that section of town) while the area around the station has seen the Mall, Blue Cross/Blue Shield, Waterplace, G-Tech, The building where the Big East headquarters are, and a number of other mid-scale developments. The location of the Big East conference is no coincidence. I think the rail connection to bigger markets (namely New York) is obviously a big factor in locating where they did in downtown Providence.
A Portland station near the Casco Bay Bridge wouldn't be the end of the world if it was done properly. That area along Commercial Street (between the bridge and Cross Street) is sort of a no-mans land that could really use a shot in the arm. I think the area will eventually fill in given the central location, proximity to the Old Port, and waterfront access. However, a well-done station there could centralize development in that area and help build up that section of town in the same way that Providence's station sped up the progress in its vicinity. Still, a station near Center St. would probably be more beneficial overall as I'm sure most people in Providence would have felt about a station at Kennedy Plaza.