Actually, it's a good idea. In no way is it a invasion of privacy. Anyone who wants to get some idea of a contributor's interests can look at his edit record. There's no good reason not to have watchlists be public.
Edit history does not equal watch list. I can watch something without having edited it. And other people being able to see my watch list is an invasion of privacy of sorts, so this should be "opt-in" only, not the default, if implemented.
Wikipedia is trying to get more people to join, so it would be a tragedy if this privacy issue kept folks away.
-Fuzheado