I don't think Watkins is ever a tier 1 dynasty WR. While the Orange Bowl is fresh in everyone's mind, I think it has distorted everyone's view of him to recency bias.
Elite dynasty WRs possess these traits:
1) Elite athletic ability(top 5 at their position, these guys will thrive despite their QB). - Watkins didn't blow up the combine(agility drills showed him to be average and a 34 vertical). Jordan Matthews(labeled that unathletic, but fundamentally sound guy) beat Watkins in every drill except 40 yard dash(.03 behind), broad jump(6 inches behind), and they tied in the 3 cone drill at 6.95(which tied them for 19th of the WRs that partipated).
2) Height - Watkins isn't tall(6'0 3/4)
3) Elite QB throwing him the ball - If a player isn't an elite athlete and doesn't have the height, then they must have a HOF type QB throwing them the rock. I'm looking at Eric Decker but doing it in a sustained fashion.
Watkins is a good athlete, but not great. He's not tall and he has EJ Manuel throwing him the football for the next 3-4 years. The best Watkins fans can hope for is a Pierre Garcon type situation where he gets a ton of targets despite not being a dynamic talent.
I wonder if there can be longer range kinds of recency bias.
There certainly have been WRs Watkins size or smaller that have succeeded at a high level.
The top WRs do seem to have some if not all of these attributes.
Coincidentally, Green also had a 34" VJ, and Watkins is faster. Green is 3" taller, but may weigh less, and doesn't look as strong after the catch.
Dez Bryant is 1" taller. I'm not sure if there is a cutoff, where 6'2" is "tall enough", but even an inch lower is a death blow to the prospects of becoming an elite WR. Bryant has a freakish VJ and acrobatic aerial skills, but Watkins is again faster.
Good point about having an elite WR. The most recent outlier is Gordon, where Weedon and Hoyer were far from elite, and he had one of the greatest seasons for a WR in league history.
To me, Watkins is kind of a combination of Roddy White and Percy Harvin. Not as thick or powerful as White (former prep state wrestling champ) or with the electric burst and suddenness of Harvin, but more Harvin-like than White in terms of his dangerous RAC skills, and more White-like than Harvin in some ways, being 2" taller and 25 lbs. heavier (the aptness of these respective combo comps with different emphasis may be asymmetrical, as Harvin reportedly can bench 400 lbs., which, if true, might make him one of the stronger WRs in the league, despite, or maybe because of, his compact frame). Hypothetically, if Watkins was White/Harvin, that would be a pretty good WR, potentially elite.
He doesn't have elite top end speed (most WRs don't, and the fastest WRs are rarely the best), but imo he does have elite acceleration and RAC skills which make him special. He is like a RB in the open field, and his toughness and physicality effectively allow him to play bigger than his size. He will truck some DBs over his career, and that isn't Green's game, so it could be a kind of equalizer (as well as compared to some of the other, taller, more athletic WRs).
It isn't an accident that he is the only WR in NCAA history to be an AP first team All-American as a true Freshman, or scouts called him the best WR prospect since Green and Jones (they didn't qualify it by saying, if he were taller and more athletic). I could see him being in the top 5 WRs or just outside in a few years.
All that said, I can't imagine trading Green for Watkins. I'm not sure about Randy Moss, but Green has to be off to one of the best three year starts to a career for a WR in NFL history. That is the big difference, Watkins is completely unproven at the next level. I think there is little chance he is terrible or even average, but he may not be as great as I think. Green indisputably is.