They make the same style watch - worth way more than a melt coin. http://www.stauer.com/item/morgan-silver-dollar-mens-watch-18295/18295
It is also quite possible that the back of the silver dollar would have been hollowed out to make more room for the movement.
Good evaluation, I never thought about that! my curiosity is really up now...although this watch looks really thick to me...
That's a beautiful watch and especially nice that it came from dad. The sentimental value alone far out ways taking that watch apart for a coin that will bring nowhere near the value of that watch as a whole with both sentimental value and the cost of that watch to replace it even if it turned out to be a drilled out carson city.
There's two Philadelphia VAMs with the dash that high - 3 & 18 - and one Carson City coin, Vam-4. VAM-4's dash is doubled, and so thick it looks like a die chip. Further, that one's double clashed hard and low, and I think the neckline clash would show past the obstruction on the glass in the pic.
I concur with others saying to leave it the way it is. That coin is polished, holed, and the reverse may be shaved away to make room for the movement. Even if it's a thick watch, some movements are very thick. The language on the case back doesn't help that much either, since it doesn't give the weight but only assures that it's 0.900 fineness. And, it's possible that it could have been melted instead.