Terry Gilliam abandoned his idea of adapting Watchmen early on because he decided that in order to condense it into a two-hour film you'd have to remove everything that makes the comic so interesting and complex.
Those quotes from Hayter at the link above don't really fill you with confidence in him, do they? "I'm, like, I don't think I want to see you naked." Sheesh.
Now, here's something that's interesting, however:
There's a guy here in Toronto by the name of Mark Askwith, who is currently one of the high-ups at the Space Channel (Canada's version of the Sci-Fi Network). He used to produce a television series about comics called Prisoners Of Gravity, he knows practically everyone in the comics industry, he's written comics for DC (including the comic book "sequel" to The Prisoner television series), and he's one of the biggest Alan Moore fans around. He knows Watchmen back to front and top to bottom like no one else I've known. I was talking to him a few months ago and he said that he'd read the David Hayter script, and he was amazed to find that "he's done it." Mark said that if anyone has reason to criticize a Watchmen script, he does, but he was really impressed with the adaptation.
I remain skeptical, unfortunately (I really do think that Watchmen can really only work as a comic), but it's interesting to hear someone say that the script is good...