The Black Freighter Makes the Watchmen Cut?

Whenever talk of the Watchmen movie is bandied about, one of the big questions is "How will they compress the whole thing down to two or three hours?" Director Zack Snyder claims it would be a six and a half hour movie if they shot every frame. So some things clearly need to be cut, and it always seemed to me that the very first thing to go would be The Black Freighter, the comic within a comic that parallels and illuminates a lot of the action in the book. However, IGN has an interview with Snyder in which he claims The Black Freighter is in! Or is it? Snyder:

"I don't have a time frame right now. I think it's running pretty long right now - it's about a 130-140 page script, not counting the black freighter. The black freighter is about 16 or 17 pages as a script."

That's pretty vague language, it's hard to tell what the meaning of keeping them so separate as scripts is... Are they just going to shoot it and see if they can fit it in the movie after the fact? Will it be a short film on the DVD? Questions are numerous, including the obvious one of how will the charm of reading a comic within a comic translate to the big screen? You can't read a comic in a movie... Will it become a movie within a movie? I doubt Snyder wants to do that, but then what? Have the onscreen action be the imagination of the kid reading the comic? It's a tough hurdle, methinks.

Also, while I was searching for a Black Freighter graphic to use in this post I came across a webpage where someone has pieced together The Black Freighter comic from the bits we get in Watchmen. There's a lot of white space where Moore gave us words but no pictures, but it's interesting to see how the story stands alone.