When actor Barry Watson proposed to Extreme Makeover: Home Edition designer Tracy Hutson last August, he wanted it to be "as casual as possible," he says. "We were just going to check out the sunset [in L.A.'s Topanga Canyon], but I added a little extra"—by way of a yellow Neil Lane diamond. But even that romantic scene couldn't compare to the news that arrived one month later: Hutson was pregnant, due in May. "Looking at those pregnancy tests... we kept going back to the store and getting more," Watson says with a laugh. "It was probably the best moment of my life."

It was a moment that contrasted starkly with Watson's life just three years ago. Then single and battling Hodgkin's disease, a form of lymphatic cancer, the 30-year-old actor had a sole focus: survival. "I said, 'All right, let's go. I'll beat this thing,' " recalls Watson, best known for his clean-scrubbed role as minister's son Matt Camden on the long-running WB drama 7th Heaven. Following a grueling six-month course of chemotherapy, he triumphed by plunging back into acting, taking the lead in the horror movie Boogeyman (hitting theaters on Feb. 4) as a man haunted by occult visitors. "There were times on the film where I was putting myself in this very dark place, and months before I had been in the darkest place I'd ever been," he says now.

Things first took a dark turn while Watson was promoting the film Sorority Boys in March 2002. "I was tired in a way that I've never been tired before," he says. Within a week he found a lump in his neck and was soon diagnosed with Hodgkin's: "My heart just sank." The chemotherapy that followed took a severe toll on his body, if not his spirit. "My hair started to thin," he recalls, "but it wasn't until someone came up and said, 'You look like the crypt keeper' that I was like, 'I've gotta shave my head.' " He did, and debuted the look onstage at the Teen Choice Awards. "He wasn't parading it, but he wasn't hiding out, either," says his 7th Heaven dad Stephen Collins. "He was not defeated."

Nearly two years after his diagnosis, Watson got a very different sort of surprise: He was reintroduced to Hut-son, 28, whom he had met when they were high schoolers in Dallas. Back then "she was this free spirit," he recalls. The two had briefly dated in their early 20s before losing touch; in December 2003 they were reunited through old friends. "I was like, 'Well, where the hell have you been?' " he says. "I was so happy, my heart just about stopped."

In turn, says Hutson, she found him to be "the same old Barry" who's "really just my best friend." Hutson, a strong believer in fate, says, "The way we bumped into each other means this was meant to be." And the baby, she adds, just makes everything even better. "We were blessed."

The rekindled romance is yet another in a series of second chances for Watson, one of four siblings raised by Michael, 63, a lawyer, and Karen, 58, a paralegal. As a kid in Traverse City, Mich, (the family relocated to Dallas when Watson was 8), he felt like a wild child. "I was like this crazy monkey," he says. Acting proved an outlet, and at 15 (after his parents split) he moved to L.A., where within two weeks he landed a role on the NBC soap Days of Our Lives. But the job was short-lived, and after a dry spell he eventually snared his 7th Heaven role. During his long run on The WB, he made a brief attempt at marriage (in 1997), but it didn't take. "I was young and silly," he says.

With his cancer now in remission, Watson has signed on for several 7th Heaven episodes this season. This month he and Hutson (on maternity leave from Extreme Makeover: Home Edition) are moving into a three-bedroom home not far from their old digs in Topanga Canyon. So when's the wedding? "Our families are on call," Hutson says with a laugh. In the meantime she's plying her trade on the new house. "There's a muralist coming in," she says of the nursery, which will feature an outdoors theme.

For his part, Watson is happily focusing on his next role: being a dad. "I'm so excited," he says. "I just want a happy, safe, healthy little one. This is the coolest thing ever."

Michelle Tauber. Strawberry Saroyan in Los Angeles