Is this hack credible for resetting the Leonardo's ethernet chip?

Yes.

This question is in regard to the stage 1 (4 seconds) watchdog. The whole Leonardo board will be overseen by another shielded Arduino Nano feeding power via a 40A MOSFET. It’s sole aim will be to watch over the Leonardo and power cycle it if locked up. And also power cycle it every 6 hours notwithstanding.

It will also have it’s watchdog enabled for an 8 second period. That’s stage 2.