My understanding is that what I want to do is not currently possible. If I could specify the theme by path, then I could do something like
git clone git@github.com:path/to/theme.git
cd theme
hugo server --watch --themePath . --source exampleSite
This would allow hugo server to --watch both the theme and the example site. As it is currently I do
git clone git@github.com:path/to/site.git
cd site
mkdir themes
cd themes
git clone git@github.com:path/to/theme.git
cd ..
cd ..
hugo server --watch
This works okay for development but it doesn’t keep the theme and the exampleSite in the same repo which is less than ideal. I think hugo is also watching the theme/.git which could eventually cause problems. If I ever wanted the theme to show up on the themes page, I would have to copy the example site repo into the theme repo which would cause the example sites to get out of sync.