Hi Sheng,
No, Watchpoints do not work with DMA reads/writes because Watchpoints use debug registers in the Power Architecture processor (MPC8548 in your case) and these debug registers can monitor only the data traffice to/from the processor. DMA read/write cycles occur entirely outside of the processor and are therefore not visible to the debug registers. You will have to use some other tool, such as a logic analyzer, to capture these cycles.