Apple Watch touch screen is non responsive. Re-powered, re-set, erased 3 times, re-Paired (7x), Now what?

Hello! My wife's Apple Watch touch screen is non responsive. The Button and Dial work fine.

The watch & its iPhone had the latest OSes (or did yesterday when I was debugging this. Installing newest iPhone iOS 14.7.1 now, but haven’t tried it yet.)

Watch:

model MYDX2LZ/A; with watchOS 7.6.1 (18U70)

iPhone SE: 

iOS 14.5.1, model MHGQ3LZ/A

I tried powering down & up, and resetting both multiple times. I tried multiple (7) pair/unpairs including restoring older “touch screen working backups” and newest backups too. I tried erasing the watch (using iCloud) three times and re-paring. Still no go? The touch screen doesn’t recognize any actions.

What to try next (other than the currently-installing iPhone iOS)? I will share margaritas with the hero, super-genius who solves this one (especially if your name is Wyle E. Coyote). After all this it's starting to feel like a hardware problem?

Thanks!