I spoke to a Patent attorney about the part before I started the project. He stated that what I am doing is in no way a violation of any of their patents. I specifically made the part look different (even though I probably didn't have to) and I was very clear about the fact that it is an aftermarket part, not an original part and that I am not affiliated with Watkins or Hot Springs. I can't tell you they won't sue me because anyone can sue anyone for anything, but what I can tell you is that if they do I will fight back. There is no way they would bully me into settling or stopping just out of principle. And if I won it would open the door for a host of other manufacturers to start making all of the other parts that fail without any fear or recourse. I'm small potatoes to them, but you never know..
Their law suit was based on an exact replica of their design and operation. It was essentially a knock off as you correctly stated. Had they changed the design and the way it operated they wouldn't have lost the suit. You can't just copy a product in aesthetics and operation, rebrand it and try and sell it. Its theft of intellectual property.
What I am doing is not at all the same thing, just like there are countless of companies making aftermarket parts for cars, blenders, ink cartridges, etc.. Fit and function can be the same or better (sometimes) but, you can't brand it as a genuine part.