...in this case shouldn't the watchdog period include these delays?
------------------

Yes, it should, but only if we all design a "perfect" system. I am not here to recommend servicing WDT in an ISR, but to say that it can be done, more like a "patch" if needed. For instance,

main(){
.
.
IncrementCount1();
ServiceWDT();
.
.
}

InterruptServiceRoutine(){
.
.
if(counter1 != counter2){
counter2=counter1;
ServiceWDT();
}
.
.
}