An Apple Editions is not a Patek Phillippe. There is a dramatically different replacement cycle which means that any attempt to cut and paste lux strategies is going to either fail entirely, or narrow the market so thoroughly as to be indistinguishable from failure.
I agree it would be a little weird coming from the modern Apple, but I just can't see a marketing pitch that sells even a "merely" $5,000 device that's functionally equivalent to a $350 one and essentially guaranteed to be obsolete within 5 years.
Obviously there's a market that can afford to treat such a luxury as disposable, but that doesn't seem like a large enough market to justify creating the Edition line.
They're going to sell these things (at least partially) through upgraded Apple Stores, and presumably those stores will have to offer (possibly off-site) jewelry-like fitting and repair services. How much of an engineering obstacle would it be, really, to guarantee that the next N generations of Watch internals will be able to be retrofitted into the Editions? Probably with a nice markup on the labor, too! After all, if there's one thing they're good at, it's continuous miniaturization.
I think it would dramatically expand the market for the high end models. If it extended down to the stainless tier, I'd certainly buy a much more expensive Gen 1 version.
So, overall: The pure commodity value of the gold might significantly defray the cost of a hypothetical $5k aWatch, but not very much of the cost of a hypothetical $20k aWatch.
I'd also expect one of two things to surface here - either the watch forever remains so incredibly lightweight in what it can do without the phone that upgrades are less necessary, or there will be an upgrade program for the expensive watches.
If there's an upgrade program (i.e. replace the S1 with S2/3/4 and upgrade the battery yearly) then I'd actually expect these gen1 edition watches to become quite the collector's items - especially a few years from now when there are only a handful of gen1s around but far more gen2/3/4 watches.
I'd think Apple is aware that the edition models don't follow the one to two year upgrade cycles of a smartphone. So, some kind of investment protection would be necessary.