Hi Bret
I agree that the depot scene is Austin. I have not seen reference to any depot at Bates, and rather think that the Bates Hotel was probably used for a waiting room and the conductor sold the tickets.
The grade into Larch from the West is actually 3.3%. The profile shows the apex to be at the East end of the yard, but it does not show the vertical curve which I think might have been a long one. When doubling the hill they would park half of the train at Larch, and I rather doubt they would do this on a 3.3% grade. I also doubt they would stop there unless they were about to run into another train. It might be that the train is still moving, but the road engineer has eased his throttle a bit while the helper is still pushing hard. They might do this if the train is about to break over the hill. I have a copy of the colorized photo, and I think the smoke in the background is enhanced rather than added.