As you might know, the documentation functionality has completely been replaced in version 6. All newer versions still contain the old help browser so it is possible to look at package documentation for packages written for version < 6. I guess that the rebuild index functionality still exists in a hidden dark corner but you don't actually need to explicitly call it: if you restart Mathematica (the FrontEnd, not only the Kernel) after having copied the package directory to
$UserAddOnsDirecotry the documentation of such "legacy" packages should be available. When you open the documentation center start page and click on the "Addons and Packages" link in the lower left corner it will bring you to the page "guide/InstalledAddOns" which should now contain a link for the fresh installed legacy package and clicking on it will open the old help browser. AFAIK there is no need for the "Rebuild Help Index" menu entry anymore.
Edit: After some experimenting I now think that the index is actually rebuilt on the fly whenever the link on the start page to open the "Addons and Packages" is clicked, so no restart is actually needed, a link to the documentation of a fresh installed legacy package should appear in the "Addons and Packages" if that is reopened from the start page.
Edit: It turned out that the package that the OP was using didn't contain a valid pre-V6 documentation. If in doubt one should check whether there is a
Documentation subdirectory in the package directory which contains subdirectories for the supported languages (almost always just
English) and in that there should be some notebook files and a file named
BrowserCategories.m with references to these notebooks. Unfortunately there are many potential sources for errors in such a
BrowserCategories.m which might also cause the documentation not to work/appear: pure existence of these files is a necessity but not sufficiency for the documentation to work.