lovecybercat, I hear ya. I have had this problem on series 0 and series 2 watch since day one. Very frustrating when I have a robust 1-hour walking workout and get one minute of "apple exercise."
I have stumbled on a sort of cheat, but since my posts have been banned as not being helpful, you may never see this. There is an app that while engaged will put you in straight exercise mode. You can workout, or take a nap, and it will count as exercise. I am not a cheater and I only use it when I have clocked a good workout with no "exercise."
i notified the developers of this "bug" months ago, but no change. Whatever.