Apple will be less cool because of this... embarking on a watch(iWatch) is not a utility market, it's a fashion market... mark my words, this will be a bust.
Steve Jobs would have laughed at this project, and gone straight after an iTV for the next push via Apple.
Only way these things/wearable devices blow up, is if Apple has the software capabilities/limits to make the consumer want it. If A-GPS chips are obsolete and low-powered GPS chips are manufactured by Qualcomm for this, then they have some push... or, if they harness this watch with incredible functionality that some other Apple hardware can't do(even though it assuredly technically can).
And, finally, is if they push this watch towards the health market. Then, there is a chance for this to be a success. But, to the contrary, health market isn't necessarily a cool market, and Apple likes to make cool things. They will really be tip-toeing around the cool factor at Apple for quite some time after this, if it does end up being manufactured.
I think this will be Apple's biggest bust since the last iPod Nano. When touch screens are small... the need for them entirely is not as useful, and just annoying to many as user control is drastically reduced.
If this product does debut in 2014 - it will annoy many early adopters, be cool to some, and dumb to others(aka NOT cool).
Personally, I think it's just rumors... MacRumors.