Is it the compression on the bass in Owl Stretching Time that makes it sound like everything has a big tail? i.e. bringing up the volume of the release? If not what purpose does the compression serve?
No, that's the shape of the envelope on the synth.
The shape of the filter envelope is such that the filter is open when the note triggers, closes quite quickly [20ms approx] and then opens up again slowly so that the filter swells as you hold the note. What you perceive to be reverb is actually the note sustaining and the filter opening.
The compression accentuates the initial transient of the sound and smooths out the volume differences between notes.