Watch repair - am I being unreasonable, or being ripped off?

It depends on how much extra time it takes. No need to do any work for free, the real question is whether to offer the option of not having it done or to incorporate it into the price and do it as part of the door service.
Confirming that the door lock and inside and outside handles work properly before opening the door would take all of 30 seconds and should be routine. Cleaning and lubricating and extensive inspection once the door is opened can be upsold if it takes long enough to add much to the labor cost, but the fact that the inspection may yield the information that there is work needed gives opportunity for further profit, so it may make sense not to charge extra.

And no one ever gets mad at the mechanic for “finding” extra problems! No, sir!

There is no way to please everyone. So what? That doesn’t mean you preemptively assume everyone is crazy or unreasonable.
If I am told that the mechanic noticed that I might soon have electrical problems due to wire casing wear and quotes the price of replacing them, I might decline the work, but why be angry? You can show the customer what you are talking about and let them decide.
The OP brought his watch for battery replacement to the same shop for years. If periodic cleaning was appropriate, why didn’t they offer to perform this service? I’d call this dumb and unprofessional.

Maybe they thought a cheap watch like this wasn’t worth suggesting that. I don’t know.

Just to keep it in perspective, by my calculations and not accounting for inflation, the OP has spent maybe $190 (20 battery changes, $30 watch band) over the course of 30 years at this shop.

For all I know he buys himself a diamond tiara and matching cuff links there weekly and recommends the shop’s handcrafted platinum grills to every member of his pimp club.
Regardless, so what if he has not spent piles of money in this store?
Should high rollers receive proper service and everyone else gets the shaft?
What is the result of this “perspective”?

It is not really ridiculous that someone who has spent a lot of money might get a pass on paying for a watch cleaning. Neither is it ridiculous that the OP can accept an extra $25 charge considering the lifetime maintenance costs on the watch so far. It’s hardly “getting the shaft” for pete’s sake.

The time to clean the watch was when it was open. Or maybe one or more of the last 20 times this same jeweler had the watch open.
The problem isn’t that he isn’t being comped a cleaning, but that no one bothered to notice that he was handed a non-working watch, then, even with acknowledgement that the watch may have gotten dirt in the works while they had it open, he was still asked to pay for the repair, and then made to feel as if it was his fault for not “maintaining” the watch.
This strategy worked though, for he believed it and is now paying them, so kudos to the shop for cultivating customers so easily led, I guess.

Yeah, the shop has been in business 30 years so maybe they know something you don’t.