There's another alternative, although it would be almost impossible to accomplish.
Find another aquatic monster, transport it to the gates of Moria, and let them duke it out. Then, you would still have a guard, but not an actively hostile one.
An easier way might be to get large quantities of salt, and put it in the pool. Since the Watcher is apparently a freshwater creature, this would kill it.
Another interesting question is- How did the Watcher get into the Water in the first place?
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