I get that the watermill being a Kingdom only building is a design choice. However I believe there may be an unintended consequence in that the Kingdom can use a docks & the watermill to bridge a river with their cities.  This is done by building one of them on the city side, the next building then can be placed on the opposite bank of the river. For example:

Docks first.

Then watermill.

Which lets me then carry on building to potentially connect that Earth Node & build a Lumber mill in the forest. Neither option would be available to a Empire faction.