His departure to Philly had more to do with San Francisco not getting a follow-up Super Bowl in the 90's than anything else, and it's really not close. The drop-off when they moved to Loville and Terry freaking Kirby was enormous. Even Garrison Hearst with his talent wasn't the consistent, complete threat that Watters was (and that's to say nothing of his constant injuries).
I strongly believe that San Francisco would have gotten at least one more Super Bowl out of '95, '97, or '98 had Watters stayed.
And to be clear, I don't put the blame on Holtz or Watters for their feud. I really don't know enough about the details to point fingers there. I'm glad we had him at N.D., though.