Bring a large pot of salted water to a boil. Toss in the pearl onions and blanch for 3 minutes. Drain them out and then shock them in ice water to stop from over cooking. Drain again. Pinch the pearl onions out of their little skins and set aside.
In a 3-quart saucepan over medium heat, combine the chicken broth, 2 tablespoons of the butter, and 2 teaspoons of the dill. Once the liquid gets hot, add the pearl onions and peas. Cook and stir for 5 minutes until well coated and thickened slightly. Add the lemon juice, watercress, remaining butter, and dill; season with salt and pepper.
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