I have to trust in McVay's opinion on what to do with either player.
Obviously, I don't believe that Austin was worth his contract in the Fisher offense, much less a McVay offense that is far more pragmatic and efficient. He doesn't even deserve to be mentioned near Watkins as a wide receiver threat.
But someone made an interesting point about what stats we expected from Watkins when we traded for him, and do you want to know what I was thinking? I wasn't thinking about potential stats, I was thinking, "holy shit, we're not going to be a basement dwelling offense anymore". I mean, I was thinking the same thing when they signed Whitworth and traded Robinson.
Same with the draft, I was wondering if we overpaid for offense and ignored some obvious needs on defense, especially after a system change there and such a highly touted corner draft.
Did we overpay across the board to improve the offense and sacrifice our defense? Sure, but the record supports that balance was in order

Now, my only curiosity, because like I said, I trust McVay, my question is at what point can we stop overpaying to improve the offense? To that point the OP isn't far off.
I think this team is a little short on draft capital to improve their offensive efficiency even if you think that Watkins isn't worth top WR money, and you know that you need depth at LT. If you consider monetary efficiency, you have to also consider the LB position as probably the sticking point in cost vs. performance after a base system change. I also think that while you're considering Watkins monetary worth to the offense since they've clawed out of the basement, you should probably also consider Johnson's value to the defense as our top corner.