I did call Apple Customer Service and as I did not have the Apple Care Plus the only option was to send it in for “repair or replacement” as they told me. I was reluctant to accept this, as I wanted a direct replacement, which they did not allow to happen. As I was on vacation I did two things:
1. I bought a new Apple Watch (with the new Storm Grey leather loop - very nice). This is a bit crazy I know, but I did not want to go a day without the AW. Shows the power the device and Apple has ;-) The plan is to then sell the repaired or replaced original watch.
2. After my return from the break I did contact Apple and within a day they did send me a UPS package (I am in Germany) to send back the defect AW. Two days ! later I received a new replacement watch through UPS. So this one is brand new.
In terms of customer service that is a super quick turn around. The fact that they did not bother with putting the defective heart rate monitor disc back in shows either that it is easier for them to just send a new one or that there was a bigger issue with the early build of the AW. I think it is the latter, as I noticed that the new AW I bought has a considerably less strong magnet than my original one. The original watch clicked very hard and strongly into the Apple Magnetic Charging dock. I think they changed the magnets later in the production to put less strain on the glued disk when being connected to the charging cable or dock. I can not prove it and it would require some experts to measure the magnetic strength from day 1 watches vs. current shipments.
If any one has the same issue, I expect Apple will also replace it with a new watch and I assume with one with a refined magnet that avoids this going forward.