You're telling me they worked on this back when the OG Droid was on Verizon shelves? They they didn't look at cpu roadmaps and evolved the device, even to 2013 hardware let alone 2010?
For another thing, Motorola sold another smartwatch in 2011 using what appears to be the exact same CPU. Which means one group inside the company would have to have built a watch in less than a year, while another group working on a watch in the same company took at least four times as long.
It's much more likely that they just had a big pile of CPUs left lying around a warehouse that they never used because the Motoactv was a commercial flop.