1. The template configmap will not change as often as the secrets and configmap key/value pairs they reference. This means you'll always need a sync loop to regenerate the template and compare it with the current generated version. This is how most configuration management systems work. Maybe we can watch the data and uses changes as triggers?
2. Watch is a bit racy when a template references multiple secrets and configmaps. It's really hard to prevent a partial config. One idea is to scale the konfd replicaset to 0 before making changing a bunch of secrets and configmaps, then scaling konfd back to 1 to trigger the processing of the templates to pick up the new values. The other option is to wait the "sync-interval", but you'll run the risk of partial configs or needing multiple runs to generate the complete config.
One possible solution to prevent 1 and 2 is to only reference one external configmap or secret for each template resource. I'm still testing these patterns in real life and will update the docs on which patterns work best for each situation. With that said, I think I'll still add a watch mode so others can test and provide feedback.