#2
I don't think there is much difference, just what they are calling it. Usually, the term "workstation" would imply more tools, like maybe practice aids, recording capability, drums, etc...
Whether or not it's good for Jazz, Shred, Fusion, etc., would depend more on what amp/cab models it has, and what fx they are including. I personally think that's more on the actual player though.
"The fool doth think he is wise, but the wiseman knows himself to be a fool." - W.S.
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#3
a modeling guitar processor usually "emulates" the sound of something else, ie a stompbox or an amp. the digitech gnx-4 for example claims to be able to replicate the sound of a marshall, or a mesa boogie etc. i would recommend that you be very careful with these, as they can have many variables. 9 times out of 10 a real marshall is going to sound better than an emulated marshall, so make sure you know what you want before you go shell out 500.00 on a workstation. also, play it before you buy it and make sure it's what you want for sure, i wish i did. i've always had bad experiences with these things for a few reasons that i'll break down.
1. they sound better at low volumes than high
2. they generally have a "processed" sound to them. a real tone guru or gear nerd will tell you that these will never compare to a tube stack.

i've owned the gnx-4 for over a year now, and i only use it to practice and record with.
i have heard from people that own it that the rocktron prophesy is amazing though.

rocktron prophesy:

http://www.musiciansfriend.com/product/RocktronProphesyGuitarPreampwithEffects?sku=180745

if you are considering a digitech product, you should read this entire thing first (and it is generally true with similar type modelers whether it be boss, digitech, line 6 or whatever:

http://www.guitarworkstation.com/forum/viewtopic.php?t=2815
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