ozy, I consider Bahrain to be a very safe place to live and the local and expat communities are very friendly and easy going.
On a downside, the island does become a little small after a couple of years, especially when your trying to avoid the week-end saudi influx. As for Muscat, I've never been there, however I've very much enjoyed working with Omanis elsewhere in the gulf and I'm told it is a very bueatiful place. It also has another bonus in that you can then drive for more than 15km without running out of road
I also hear that Gulf Air has improved it's package for maintenance staff considerably over the last 3-4 years. Taking a guess, as it depends on ratings and experience, I would be expecting about 2000 Bahrain Dinahs a month, however while this doesn't convert to much in aussie dollars, please remember that it's tax free, + villa accommodation, + medical, + schooling for your 2 children.
Hope everything works out for you, as time in the Middle East is a highly rewarding experience.