To use this recovery you need to use the scatter file provided in the zip.
Select "download only" in SP Tools
Then ONLY select the recovery image and boot image and flash.
Once you have booted into the watch again you will need to enable usb debugging in developer options.
Then use your pc and ADB to reboot the watch into recovery - command = adb reboot recovery
Once you are in recovery flash the latest SuperSu.zip to achieve root.
After all this - use SP Tools to flash back to the stock H2 boot image which can be found in the H2 firmware section.
Remember - you cannot accept OTAs after rooting.
To accept an OTA you must first flash back to a stock firmware.
Download here goo.gl/zvLt73
Cheers & and special thanks to Ciro Danise.