My guess it's not so much that this particular extension is the most useful in and of itself, but that there's a unique opportunity coming up.
The current South Waterfront Street Plan assumes that both SW Moody and Bond would be extend to SW Hamilton
St. If the warehouses south of Bancroft were about to be redeveloped into high rise towers that might be feasible, but there's no indication that's imminent. Indeed the Oregon Ballet Theater has just moved into one building, and Tesla Motors is converting another one to a showroom. For obvious reasons City Council isn't going to use its eminent domain powers to raze these buildings.
So, the new plan is instead to extend SW Moody as a two-way street from SW Bancroft to SW Hamilton
Ct.
This is going in front of City Council for conceptual approval the week after next.
The northern half of that extension has no street at all right now, and the southern half would likely entail a complete rebuild of the street. So, if PBOT is going to all that effort, why not put some rails in the street? In the scope of the entire project the additional cost for extending the streetcar is probably pretty minimal.
Interestingly (and I'm using that word liberally) PBOT is also looking at changing the numbering system in South Portland. Addresses close to the river have a leading zero in them, which causes a lot of confusion. They're now looking at renumbering these so that they have a S prefix rather than SW. This would take the number of quadrants in Portland from five to six, a change that the late Douglas Adams would have no doubt appreciated.