I think the S3 design is dead.
The S4 will be the low end model with no AOD starting at $199 USD
The S6 will have a few extra features notably o2 sensor and a slightly smaller bezel.
This. I don't see why people are confused about this. They clearly can't keep selling the AW3 if they don't plan to support it in watch OS 8. So they are essentially bringing back the AW4 and calling it by another name. Apple always uses the old models as the "cheap" version. There is no mystery here, except for the name, which they have to change because the AW4 has been discontinued.