So, what would the result be if the govt spent say 400 million, and this resulted in a gas station in orbit.

First, it establishes a market for water in space. This means that if the Moon or NEOs have minable water, there is the potential of having a market in space for this water.

Second it could make going beyond LEO, cheaper- requiring less rocket to go to such places as the Moon or Mars. It also allows one to reuse rockets. And unlike reusable rockets that get into space, there shouldn't be much penalty to making rockets that go beyond LEO, reusable.

Third, it could make getting into space cheaper, if one wants to return to the earth surface. One could use more rocket power to slow down one's orbital speed, making reentry less challenging- one could have a sub-orbital type reentry instead of an orbital type reentry.

Fourth, we have a launch market on Earth, this would allow a "launch market" in space. Or a tug service.

With a tug service in space, one could repair, service, or salvage satellites or space junk. Or instead or in addition to a rocket re-fueling, a tug could attach to it and boost it to wherever it's going.
Or another example is garbage from ISS, instead being burning up in Earth's atmosphere, it could be taken somewhere and "recycled" or used "as is" for shielding or ballast purposes.

So, in addition to a market for water in space, one also has other markets. Oxygen and hydrogen can be used for rocket fuel, but each also has separate uses. With towing one gets a scrap metal market which could lead to space manufacture using the scrap. Things like foamed aluminum, and/or simple structural members, so instead making solar arrays which need to be folded in order to launched from earth, one could make solar arrays not required to be folded.
But most importantly and most pertinent to earthlings and joe sixpacks [or even environmental wackos] one would create a market for electrical power in space.
So, SPS become doable- their first market is to space, but as costs lower it would become possible to sell the electricity to the earth surface.
You could have a situation where you have 100 kw in LEO making rocket fuel and say charging $1 per kw/h and on earth you have unique situation in which parties could interested in paying $2 per kw/h if they could get say 50 kw for 2 months time period: so 60 days times 24 times 50 times 2 which is $144,000 worth of electrical power.
And suppose there was somewhere around a couple dozen of these situations per year, globally. It could worth it for the SPS operator to set up a way to beam power to earth or elsewhere in space, in addition to selling power locally in space. So this kind of thing could earthquake or other kinds of disaster relief, military operations, open air concerts or other types of picnics.

And after this one might towns, that have for whatever reason have high cost for electricity, which might be willing to pay say 10 cent per kilowatt or to handle peak loads [or lack of wind:)]. And eventually get to the point where space power is cheaper than other ways of generating electricity on earth [less than 1 cent per kw/h] which could take a century or more into the future.