I've seen this myself. I have PI appliances in my house and cars. I had a Pi running shairport for apple airplay of music in my house that had this type of error. It was caused by SD card corruption after a power hit. The problem is that the linux filesystem journaling isn't aware of flash page size / alignment and it can get corrupted along with the data if power drops during write. I saw the same when I started using the Pi as a movie server in the car so kids could watch movies on long car trips from their various idevices, laptops, etc. It worked for an entire 3-week road trip and then died with SD corruption right before I tried to show it to a neighbor. I even have one power supply that'll corrupt the SD card every time I unplug it if not properly shut down (argh). I considered making a mini-ups based on NiMh AA rechargeable batteries and then my unix and engineering background kicked in.
Simple is elegant in my book. You don't need to power cycle your pi daily. You simply need to make the root filesystem read-only. First go through the steps from this link: http://blog.gegg.us/2014/03/a-raspbian- ... -fs-howto/
. Once you've rebooted in read-only mode, see which services are broken. For me, it was lighttpd and udhcpd. I had to modify the config files for these to have them log to /tmp. I also had to touch the lease file for udhcpd after telling it to do everything in /tmp as well. Basically, if a service isn't working, try to start it and then use logread to view the in-memory syslog to see what's wrong. It should be obvious (missing files, directories). Simply mount -o remount,rw / make changes, mount -o remount,ro /, and try to start the service again. Once you have it all sorted out reboot and see if it works.
I've now had my media center Pi running almost a year since our last power hit, and the car Pi v1 (which was a Pi duct-taped to an old access point and ssd hard drive) has been a flawless appliance that the kids throw in the car when we go on trips. If you just have to have a watchdog, again simple is best. I would go with a mosfet latching circuit and use an R/C circuit that must be refreshed by GPIO. There are ways to make this bullet-proof using a 555 timer, but I suspect you'll be quite happy with the hardened Pi without the watchdog. If you still want to go this route, I can elaborate further.
Back to simple elegance, with this approach, you simply remount / in read-write mode prior to rpi-update or installing new packages. Way simpler than building a UPS, and you can do all this in a few hours.