We're looking for a solution where a PDF can be created and distributed to multiple people - each with their own username/password to open - and also when opened created a user based water mark on the document. Is this something that can be done inside Acrobat Pro or is there a higher end product that does this?
If the list of people who and only who you want to be able to open this PDF is predefined, then you can use Certificate Encryption in Acrobat. For this method to work each of possible recipients of the encrypted PDF needs to procure a digital certificate with a private key enabled for encryption and send you the public key version of this certificate. Then you encrypt this PDF with public key certificates (there may be many of them) of all recipients you want to be able to open this PDF. Then you distribute this PDF to all recipients and each of them can then open this PDF with their private key certificates.
You can also create PDFs with Optional Content which contains different watermarks with the selector for a watermark based on user ID or some other identification of the user. I do not know, though how to create such Optional Content using just Acrobat Pro. You may need to write a plugin to Acrobat to do that.