I'm not buying this 100% yet. Watkins is one of the worst offenders at putting out stuff that turns out to be wrong. If Waters does end up here, he's got the scoop. If he doesn't everyone will forget about it, or he'll just say Waters turned us down.
That said, I think it's potentially a good move. My guess (as others have already stated) is that Waters would join us after TC is over and we're back in Dallas. I also think that would mean the end of Livings with the Cowboys. I think they are OK with Berny starting, but at the same time they are worried that he can't stay healthy. By putting Waters in a guard, it's an upgrade at the starter position and also gives us better depth with Berny as the primary backup.
That's just a guess, any number of things could happen though.
If this happens, it will be interesting to see how the rest of the backup situation shakes out. It puts Kowalski, Arkin, Livings, Bernadeau, Costa and Cook all on the bubble, with 2 to 4 of them on the outside looking in. (probably 2 or 3 cut though)