Watson is imho judged too often as an openings batsman that can bowl a bit, rather than what he actually is: an all-rounder.
I guess the way to build a test team (in Aus) is to pick your best keeper, pick your 3 best fast bowlers, pick the best spinner, pick the 5 best batsmen and see if it hangs in the balance. Most teams (not all) will then need a 5th bowler, but will also want to see a guy that can hold a bat. Hence an all-rounder is picked. If this all-rounder is of the type he would be in the team for either his bowling or batting alone, he would already have been picked for the first 10..... Hence, a typical all-rounder is someone who would NOT be picked for his batting alone, neither for his bowling alone. He will be selected because he has a fair chance to make an impact either way.
I think it makes sense for Australia to pick Watson. Others might disagree. But that's not the point.
If one has decided to pick Watson (or any all-rounder), the regular thing to do is to make him bat at 6. But Watson an extra! He's fine as an opener who consistently takes the shine of the new ball. I think it is a very good decision that, if you play Watson anyway, you play him as an opener. But then one has to understand he cannot be judged as a typical opener. He should be judged as an all-rounder. And as such, his test figures are really fine!
No. Australian selection over the last however many decades has been:
Pick the 2 best openers
Pick the best number 3
Pick the 3 best middle order batsmen
Pick the best keeper who isn't a complete dud with the bat
Pick the 3 best quicks
Pick the best spinner
And it's been very, very successful. We've rarely deviated from that, and when we have, it has rarely worked.
Watson's never been selected/recalled because he fitted the above criteria.
Initially, he was selected so we could play both Warne and MacGill in the same team and still have three seamers-
3rd Test: Australia v Pakistan at Sydney, Jan 2-5, 2005 | Cricket Scorecard | ESPN Cricinfo
Fortunately, when you have McGrath, Gillespie, Warne, Langer, Hayden, Ponting and Gilchrist in a side, you can select a player like Watson and he'll be ok.
I don't think we have that luxury any more. And if Watson is not being a significant contributor with the ball (which he isn't), then I think we should select a better batsman than him, particularly now our bowling attack (with Johnson out) is looking decent and at times threatening.
I remember reading a few years ago that Watson was reading Keith Miller's bio to try and become more like him (and maybe stop being a sooky nancy). Bah! Miller is the only genuine post war all-rounder Australia have had.