Darn, can't edit my post. Yesterday, all compiled in Xcode happily with the above settings. I attempted debug install today, on my Apple Watch, and bundleID was rejected. I've since updated the Watch extension bundleID to com.myname.myapp.watchkitapp.watchkitextension and it installed.
All other identifiers/settings remain the same. Strangely enough, I had tried this very setting and it failed to build. So make sure you have a fully clean build when changing identifiers.