Apple Watch 3 stuck in set up loop following factory reset

My son reset his Apple Watch 3 because it wasn't accepting updates. Now it's stuck in a setup loop that won't complete

• Start with iPhone saying "Good Afternoon ..." with Start Pairing button
• In pairing, Apple Watch shows the random cloud, use iPhone camera to scan
• Apple Watch then transitions to the swirl logo showing "Designed By Apple In California"
• Paired Apple Watch - "Your Apple Watch is Paired" with Set Up Apple Watch as next step
• Select wrist preference, Continue
• iPhone gets stuck "Connecting to your Apple Watch".
• Connecting eventually times out, then shows “Unpairing Apple Watch.  Your iPhone is currently unpairing Apple Watch.  This might take a little while.”
• Apple Watch continues to display swirl logo showing "Designed By Apple In California"
• iPhone shows "Unable to Connect to Apple Watch" with a cancel button. Cancel goes back to "Good Afternoon" screen.
• Apple Watch continues to display swirl logo showing "Designed By Apple In California"
• Start pairing goes to a "Continue Setup" screen with Continue and Start Again buttons.
• Continue goes to "Searching for Apple Watch" which spins. After some minutes it returns to Good Afternoon screen.
• Start Again goes to Set Up Apple Watch, Setup for Myself goes back to "Searching for Apple Watch"
• Apple Watch continues to display swirl logo showing "Designed By Apple In California", then times out with "Unable to Connect to Apple Watch". The Cancel button goes back to Good Afternoon
• Long press on the watch crown offers factory reset

Have tried factory resetting & power cycling the watch, have restarted the phones, no change in behavior.

Have tried this with iPhone 12 running 17.2.1.  Also tried with SE running 16.6.  Date & time properly configured on both phones.

(The tags on this article are showing iPhone 5, iOS 10, those are incorrect and doesn't look like I can modify)