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I would make it 100% clear that polishing is not going to make this go away. If they think there is any wiggle room whatsoever they may simply polish the damage out and hand it back to you like that. Please don't give them any space that would allow that to happen. I would put it in writing that the watch is to be restored to as new condition and polishing will be a waste of time because you will not accept the watch back like that. You want the watch back in the same condition as it was before they mangled it, or they can keep the watch and refund you your money, up to them.
Regarding legal action mentioned above, your credit card company should take care of that for you, no need to spend a cent on attorneys. Your CC company should be able to get you money back if you are not satisfied with the remedy. Polishing is not a remedy. Don't let them do anything with your watch until that is 100% clear.
How much does it cost Rolex to make a case back like that anyway, probably less than $100? No precious metal cost because they take the damaged one in exchange.
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