I, too, am very excited about the prospect of micro-LED displays. They should have many benefits over OLED such as higher brightness which will lead to better contrast ratios, either less susceptible or not susceptible at all to burn in and will take even less power to operate than OLED.
I think that it makes perfect sense to start with a small display for the Apple Watch and then work to scale the technology up for larger display sizes. This strategy should also help with keeping costs in line.
I just read an article yesterday about quantum dots becoming another display option in the next few years. Currently, they are being used to enhance LCD and OLED displays, but they have now developed—at this point just small ones—displays that are driven directly with the photoluminescent quantum dots which will provide again, brighter displays that are much, much simpler to manufacture so they should also reduce display costs significantly.
It will be very interesting to see which technology will take over the display market or if they will peacefully coexist.