Watters was technically a Captain, given the battlefield commission by his predecessor. Though he may wear a cadets uniform the rank would hold.
In the beginning, Nog does appear a little uncertain about the structure, but after being (essentially) bribed he takes his place.
Commander Austin Harris, First Officer, Deep Space Nine (by FltCpt. Bossco)
8.01 - Darkest Before Dawn
(Chapter 8 added, 12/09/2015)