You could place light grey text on a master page or have the user fill in the form and once complete watermark a static PDF document as the result
Is it possible to watermark dynamic pdf? I tried the watermark function of Assembler Service but got 'PDF document "test.pdf" has dynamic XFA forms and cannot support content operations.' Is there any other way that might bring success?
The message is basically telling you that your PDF is an interactive XFA document and not a flat PDF document. I don't think Assembler allows you to add watermarks to an XFA interactive document.
Try flattening the document first by passing it through an Output Service and see if it works.