Matthew Yglesias is discussing much larger cities in this piece in Slate, but a number of his arguments sure sound like they could apply to downtown Rutland.
Providing these kinds of dense networks of related but independent small undertakings is exactly what cities are good at.
What they’re not so good at is playing host to modern retailers. Traditional urban neighborhoods feature old buildings with small, often irregularly shaped spaces that are ill-suited to the needs of contemporary retail chains.
Yglesias goes on to suggest that "development and expansion of nightlife hubs should be a key economic development priority for cities." This does seem to line up with the talk last week at the Rutland Business Summit about the potential of a larger cluster of restaurants in downtown.