YES ...
GoodBye Circle hopefuls !!
While I don't think it's likely we will also see a round watch with this release, I'm not sure why you say it couldn't happen based on this. This only confirms the display area will be larger for the rectangular watch, not that there won't be a round version too, however unlikely.
The rendered graphics above also don't seem to account for the anticipated rounded corners which will cut into those pixel dimensions somewhat as well. And it's the rounded corners that set the display up for easily converting to a completely round display at some point in the future.