OK, so we over-reacted. It was already determined that Kenny Watson's hamstring injury would keep him out against the Cowboys. So, rather than freeing up a roster spot for Chris Henry, the Bengals decided to release Watson for Henry, and then sign him back once they determine the player they'd release.
We're still waiting on the official roster move, so Watson is, as of this writing, unemployed.
Chick Ludwig wouldn't be shocked if the Bengals cut Henry.