Solved
Wincom (Windchill Extension - Watermarks) opened a ticket with my team and created a BETA release where the Actions > Watermark option was no longer greyed out for EPM documents. We are now able to Overwrite and Download the EPM doc with our custom watermark as intended. It is also a part of a workflow, and the watermark is successfully being applied when a document changes to the Released state. Big thank you to the Wincom developers.
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