I used CamTwist to solve this problem. Select "Desktop +" as the source of the video in PIP mode. Set up your Desktop + source to use the clock simulator screen as an input, cropping the menu bar. Then add a slide show source with a beautiful Apple Watch image. In the PIP settings, scale, move and crop the video pulse of the simulator until it overlays the image of the slide show on the clock surface. In the CamTwist tool menu, set the full screen of the video stream to any connected monitor or projector.
The clock simulator itself remains on the main screen and can be controlled using the mouse / keyboard. Even when the simulator is minimized or hidden, CamTwist continues to display a “live image”.
See http://camtwiststudio.com (I used v2.4 on OSX 10.10.4, not tested with 2.5 or higher ..)

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