Various sites and blogs, such as ICv2, are reporting that Fox and Warner Bros. have settled the legal dispute, and the WATCHMEN film will stay on track for the March 6th release.
Details of the undisclosed are scarce at this time, but it looks as if Warner will pay Fox an up front cash settlement as well as portions of the box office take, and Fox will have no part in the distribution of the film.
Some terms of the deal are already leaking out, see the Robot 6 blog here.
What does this mean for us, the fans? Well, the movie is coming out and will not be shelved because of the studio war. The project has come along too far to see it go away now, so hold onto your hats because we're less than two months away.