A sucker is born everyday.
We just might!
Even the steel Rolex watches like Explorer II go for many thousands, and those you have to wind up yourself....
China naturally. Where else.
The pricing seems to fall under the typical Apple structure of "barely reasonable." I don't see the price as an issue for people looking for a great watch. That's the key. If you're looking for cheap gadgets, you're going to be disappointed. $500 for a stainless watch these days is about what they all cost. And the gold version, well... I can't afford a solid gold watch anyway so I don't even bother looking in the direction of Tag, Rolex, etc...
I suspect the Sport Watch is going to see extremely high sales volume (almost all the sales volume, in fact—simply because it's the cheapest) until people have it for a full upgrade cycle and see how long the thing lasts. Does the battery stop holding a full day charge after 6 months? A year? To me, that's the deal-breaker question that can only be answered after they're used for 6-12 months.
I'm sure Apple considered all of this, and the Apple Watch is built to be only a little more than a wearable 2nd screen for the iPhone. In other words, there's little to upgrade each year, because it's nothing more than a screen for the iPhone. The software for the watch will actually be baked into iOS on your phone and the apps that are built specifically for the watch.