Proper technique needed to nest a setWatch() within a separate setWatch()

Goal to stay between 100000-800000 bits/sec.

You're totally out of luck then - setWatch is not going to work. Maybe you'll get it working but it'll take ~32ms to process your 32 bits of data in JS - so I don't understand why you want a really high bitrate.

Can you try this code:

// out
var spi = new SPI();
spi.setup({mosi:D29,sck:D28});
// in
pinMode(D31, "input");
var d=1;
setWatch(function(e) {
  d=(d<<1)|e.data;
  if (d&256) {
    print("Got "+(d&255));
    d=1;
  }
},D30,{edge:"rising", data:D31, repeat: true});

// Test
spi.write([1,2,3,4]);

Just tested this on an nRF52 (all running on the same device) and it's fine, even at the 'normal' speed.